Assume That Stock Market Returns Do Not Resemble a Single-Index

question 40

Multiple Choice

Assume that stock market returns do not resemble a single-index structure. An investment fund analyzes 132 stocks in order to construct a mean-variance efficient portfolio constrained by 132 investments. They will need to calculate ____________ covariances.

• A) 100
• B) 132
• C) 4,950
• D) 8,646

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Definitions:

Financial Advantage

A benefit gained in financial terms, often seen as an edge over competitors or a position that offers greater monetary gains or savings.

Outside Supplier

Refers to businesses or individuals that provide goods or services to a company but are not part of the company's internal structure.

Segment Margin

The amount of profit or loss produced by a particular segment of a business, after accounting for direct and indirect operating expenses.

Financial Advantage

The benefit or profit derived from financial actions or decisions, such as investments or loans.