6)         Assume that stock market returns do follow a single-index structure. An investment fund analyzes 1000 stocks in order to construct a mean-variance efficient portfolio constrained by 500 investments. They will need to calculate ________ estimates of firm-specific variances and ________ estimate/estimates for the variance of the macroeconomic factor.                A)   500; 1                   B)   1000; 1             C)   124,750; 1             D)   124,750; 500             E)   250,000; 500 Choose the correct option th justification.

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A: a) Expected profit (in dollar) =[$1,000,000 *( 0.025+1.6*Rm)] - [$1,000,000 * (-0.025 +1.6*Rm)]

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A: Systematic risk refers to the risk of the entire segment of the industry or market.

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A:

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Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.