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

question 53

Multiple Choice

Assume that stock market returns do not resemble a single-index structure. An investment fund analyzes 100 stocks in order to construct a mean-variance efficient portfolio constrained by 100 investments. They will need to calculate ____________ covariances.

• A) 45
• B) 100
• C) 4,950
• D) 10,000

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Definitions:

Entire Economy

The entire economy refers to the sum total of all economic activities and interactions within a country or region.

Scientific Method

The procedure for the systematic pursuit of knowledge involving the observation of facts and the formulation and testing of hypotheses to obtain theories, principles, and laws.

Economists

Professionals who study and analyze economies, including their production, distribution, and consumption of goods and services.

Hypotheses

Proposed explanations made on the basis of limited evidence as a starting point for further investigation.