The single-index model
A) greatly reduces the number of required calculations relative to those required by the Markowitz model.
B) enhances the understanding of systematic versus nonsystematic risk.
C) greatly increases the number of required calculations relative to those required by the Markowitz model.
D) greatly reduces the number of required calculations relative to those required by the Markowitz model and enhances the understanding of systematic versus nonsystematic risk.
E) enhances the understanding of systematic versus nonsystematic risk and greatly increases the number of required calculations

Question

Quizplus · Accepted Answer

The single index model both greatly reduces the number of calculations and enhances the understanding of the relationship between systematic and unsystematic risk on security returns.

The Single-Index Model