Suppose you are doing a portfolio analysis that includes all of the stocks on the NYSE.Using a single-index model rather than the Markowitz model _______ the number of inputs needed from _______ to ________.
A) increases,about 1,400,more than 1.4 million
B) increases,about 10,000,more than 125,000
C) reduces,more than 125,000,about 10,000
D) reduces,more than 3.6 million,about 8,100
E) increases,about 150,more than 1,500

Question

Quizplus · Accepted Answer

The single-index model reduces the number of inputs needed from more than 3.6 million (in the Markowitz model) to about 8,100 by simplifying the covariance matrix calculations.

Suppose You Are Doing a Portfolio Analysis That Includes All