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

question 1

Multiple Choice

Assume that stock market returns do not resemble a single-index structure.An investment fund analyzes 40 stocks in order to construct a mean-variance efficient portfolio constrained by 40 investments.They will need to calculate _____________ expected returns and ___________ variances of returns.

• A)100, 100
• B)40, 40
• C)4950, 100
• D)4950, 4950
• E)none of the above

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Definitions:

Liabilities

Financial obligations or debts that a company owes to others, such as loans, accounts payable, and mortgages.

Purchasing Policy

The price and timing of raw materials and other goods and services necessary to build, sell, and support products.

Compensation

The payment or benefit given to someone in exchange for services or as a recompense for losses.

Obligations

Duties or commitments that one is bound to fulfill legally or morally.