For a six-security portfolio, it is necessary to calculate ___ covariances plus ___ variances.
A) 36, 6
B) 30, 6
C) 15, 6
D) 30, 12

Question

Quizplus · Accepted Answer

In a portfolio with six securities, the number of covariances is calculated using the formula n(n-1)/2, where n is the number of securities. For six securities, this is 6(6-1)/2 = 15 covariances. Additionally, there are 6 variances, one for each security.

For a Six-Security Portfolio, It Is Necessary to Calculate ___