If the index model is valid, _________ would be helpful in determining the covariance between assets GM and GE. A) β_GM B) β_GE C) σ_M D) all of the options E) None of the options are correct.

Question

Quizplus · Accepted Answer

The index model suggests that the covariance between two assets can be determined by their individual betas (β) with respect to the market. Thus, all the options provided, which involve beta terms for GM and GE, would be relevant in calculating the covariance between these assets according to the index model.

If the Index Model Is Valid, _________ Would Be Helpful