Exam 7: Portfolio Theory Is Universal

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

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

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An efficiently diversified portfolio still has _____________________ risk.

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

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

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

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

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

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Company specific risk is also known as:

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The relevant risk for a well-diversified portfolio is:

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

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

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

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