The problem with Markowitz's model is that a number of covariance have to be estimated. for example for a portfolio of 30 stocks, the covariance that to be estimated are

Question

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For a portfolio of 30 stocks, the number of unique covariances that need to be estimated is given by the formula n(n-1)/2, where n is the number of stocks. Plugging in 30 for n gives 30(29)/2 = 435.

The Problem with Markowitz's Model Is That a Number of Covariance