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:

Net Income

The net income of a business following the deduction of all expenditures and taxes from its total revenue.

Owners' Equity

The residual interest in the assets of a company after deducting liabilities, representing what the owners own outright.

Investment

The process of distributing funds with the goal of earning revenue or gains.

Acid Test Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its quick assets.