What is the major insight provided by the Markowitz framework in portfolio theory?
What will be an ideal response?
The main insight of the Markowitz framework is that when assets are combined to create
a portfolio, the portfolio's risk (as measured by the portfolio variance) is not merely some weighted average of the risks of the individual assets comprising the portfolio. Instead, the portfolio's riskdepends on the covariance or correlation of the returns between each pair of assets comprising the portfolio. The covarianceis the degree to which the returns on two assets co-vary or change together. The correlation is analogous to the covariance between the expected returns for two assets. Specifically, the correlation between the returns for two assets is equal to the covariance of the two assets divided by the product of their standard deviations.
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The statement of cash flows would disclose the purchase of a building for cash
A) nowhere on the statement. B) in the operating activities section. C) in the investing activities section. D) in the financing activities section.
A ________ compares multiple items according to a single characteristic
A) frequency polygon B) line chart C) horizontal bar chart D) histograph E) paired bar chart
Ending a reliance on numerical goals would be associated with which of Deming’s 14 Points for Management?
a. Drive out fear b. Eliminate quotas for workers and managers c. Break down barriers between departments d. Take action to accomplish the transformation
Which of the following would not be a crime against public authority?
A. Perjury C. Fraud B. Bribery D. Obstructing justice