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

question 73

Multiple Choice

Assume that stock market returns do not resemble a single-index structure.An investment fund analyzes 150 stocks in order to construct a mean-variance efficient portfolio constrained by 150 investments.They will need to calculate _____________ expected returns and ___________ variances of returns.

• A)150, 150
• B)150, 22500
• C)22500, 150
• D)22500, 22500
• E)none of the above

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Definitions:

Issued

Refers to the process of making something available or distributing it, commonly used in the context of financial instruments like stocks or bonds.

Revolving Line

A type of credit that does not have a fixed number of payments, in contrast to installment loans; credit is automatically renewed as debts are paid off.

Annual Interest Rate

The percentage of interest that is charged or earned on an investment or loan over the course of a year.

Revolving Line

A credit arrangement that allows a borrower to use or withdraw funds up to a designated limit, repay them, and borrow again.