The Total Number of Variance and Covariance Terms in a Portfolio

question 128

Multiple Choice

The total number of variance and covariance terms in a portfolio is N². How many of these would be (including non-unique) covariances?

• A) N
• B) N²
• C) N²- N
• D) N²- N/2
• E) None of these.

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Definitions:

Potholes

Circular holes in the bedrock of a riverbed or a roadway, formed by the abrasion of small stones and sediment whirled around by water.

Swirl

The movement of a fluid in a twisted or spiraling pattern, often occurring in natural systems like air currents and water bodies or in engineered applications.

Sediments

Particles of rock, minerals, or organic matter that have been transported and deposited by wind, water, or ice.

Suspended Load

Fine particles, generally clay and silt, that are carried suspended in moving water.