For a Highly Diversified Equally Weighted Portfolio with a Large

question 76

Multiple Choice

For a highly diversified equally weighted portfolio with a large number of securities, the portfolio variance is:

• A)the average covariance.
• B)the average expected value.
• C)the average variance.
• D)the weighted average expected value.
• E)the weighted average variance.

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Definitions:

Fried Twinkies

A deep-fried snack made from an American Twinkie cake, often found at fairs and festivals as an example of indulgent carnival food.

Tax Rate

The percentage at which an individual or corporation is taxed.

Incidence

Of a tax, a measure of who really pays a tax.

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved.