Exam 7: Portfolio Theory Is Universal

The number of covariances in the Markowitz model is ________ ; the number of unique covariances is [n (n-1)]/2.

Two stocks with perfect negative correlation will have a correlation coefficient of:

An efficiently diversified portfolio still has _____________________ risk.

In the case of a four-security portfolio, there will be 8 covariances.

Portfolio risk is most often measured by professional investors using the:

Markowitz diversification, also called _____________ diversification, removes _________________ risk from the portfolio.

Which of the following portfolios has the least reduction of risk?

-------------------is concerned with the interrelationships between security returns as well as the expected returns and variances of those returns.

Company specific risk is also known as:

The relevant risk for a well-diversified portfolio is:

Why was the Markowitz model impractical for commercial use when it was first introduced in 1952? What has changed by the 1990s?

Security A and Security B have a correlation coefficient of 0. If Security A's return is expected to increase by 10 percent,

The correlation coefficient explains the cause in the relative movement in returns between two securities.