Assume That Stock Market Returns Do Follow a Single-Index Structure

question 34

Multiple Choice

Assume that stock market returns do follow a single-index structure. An investment fund analyzes 750 stocks in order to construct a mean-variance efficient portfolio constrained by 750 investments. They will need to calculate ________ estimates of firm-specific variances and ________ estimate/estimate(s) for the variance of the macroeconomic factor.

• A) 750; 1
• B) 750; 750
• C) 124,750; 1
• D) 124,750; 750
• E) 562,500; 750

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Definitions:

Healthcare

A broad sector concerned with the provision of medical services to maintain and improve physical and mental health.

Cancer Rates

The frequency or number of new cases of cancer in a population over a certain period of time.

Cancer-Related Deaths

Fatalities caused by cancer, a disease characterized by the uncontrollable growth and spread of abnormal cells.

Psychosocial Risk Factors

Elements originating from social interactions and psychological conditions that can influence an individual's health and well-being.