For a highly diversified equally weighted portfolio with a large number of securities,the portfolio variance is:
A) the average covariance.
B) the average expected value.
C) the average variance.
D) the weighted average expected value.
E) the weighted average variancE.

Question

Quizplus · Accepted Answer

In a highly diversified equally weighted portfolio with a large number of securities, the portfolio variance is primarily determined by the average covariance between the securities, as individual variances contribute less to the overall portfolio variance.

For a Highly Diversified Equally Weighted Portfolio with a Large