Assume That Stock Market Returns Do Follow a Single-Index Structure

question 61

Multiple Choice

Assume that stock market returns do follow a single-index structure.An investment fund analyzes 500 stocks in order to construct a mean-variance efficient portfolio constrained by 500 investments.They will need to calculate ________ estimates of firm-specific variances and ________ estimate/estimates for the variance of the macroeconomic factor.

• A)500; 1
• B)500; 500
• C)124,750; 1
• D)124,750; 500

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Definitions:

Noise

Any unwanted sound or a distraction that interferes with the communication process, affecting the clarity of the message being sent or received.

Communications Channels

The mediums through which information is transmitted from one party to another, including verbal, written, and digital platforms.

Distraction

An event or object that draws someone's attention away from the task at hand or their intended focus.

Active Listening

The act of concentrating on the true meaning of what others are saying.