For a Portfolio of N-Stocks, the Formula for Portfolio Variance

question 18

Multiple Choice

For a portfolio of N-stocks, the formula for portfolio variance contains

• A)N covariance terms.
• B)N(N - 1)/2 different covariance terms.
• C)N² covariance terms.
• D)N - 1 covariance terms.

---

Definitions:

Positive NPV Projects

Investment opportunities where the net present value (NPV) is greater than zero, indicating that they are expected to generate a profit.

High Dividend Payout

The practice of distributing a large portion of a company's earnings to its shareholders in the form of dividends.

Distribution

The process of allocating assets, earnings, or dividends among shareholders, or the spread of investments within a portfolio.

Corporate Dividend Payout

The portion of earnings distributed to shareholders in the form of dividends.