There are 1,700 stocks in the Value Line index. How many covariances would have to be calculated in order to use the Markowitz full covariance model?
A) 1,700
B) 5,650
C) 12,350
D) 1,444,150

Question

Quizplus · Accepted Answer

The number of covariances required in the Markowitz full covariance model is given by the formula n(n-1)/2, where n is the number of stocks. For 1,700 stocks, this is 1,700(1,700-1)/2 = 1,444,150.

There Are 1,700 Stocks in the Value Line Index