Table 4.8 Effect of Diversification Number of Securities 1 2 4 6 8 10 12 14 16 18 20 25 30 35 40 45 50 75 100 125 150 175 200 250 300 350 400 450 500 600 700 800 900 1000 Infinity Expected Portfolio Variance 46.619 26.839 16.948 13.651 12.003 11.014 10.354 9.883 9.530 9.256 9.036 8.640 8.376 8.188 8.047 7.937 7.849 7.585 7.453 7.374 7.321 7.284 7.255 7.216 7.190 7.171 7.157 7.146 7.137 7.124 7.114 7.107 7.102 7.097 7.058
Table 4.8 Effect of Diversification Number of Securities 1 2 4 6 8 10 12 14 16 18 20 25 30 35 40 45 50 75 100 125 150 175 200 250 300 350 400 450 500 600 700 800 900 1000 Infinity Expected Portfolio Variance 46.619 26.839 16.948 13.651 12.003 11.014 10.354 9.883 9.530 9.256 9.036 8.640 8.376 8.188 8.047 7.937 7.849 7.585 7.453 7.374 7.321 7.284 7.255 7.216 7.190 7.171 7.157 7.146 7.137 7.124 7.114 7.107 7.102 7.097 7.058
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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For the data in Table below, suppose an investor desires an expected variance less than 8. What is the minimum number of securities for such a portfolio?

Transcribed Image Text:Table 4.8 Effect of Diversification
Number of Securities
1
2
4
6
8
D246K25
10
12
14
16
18
20
30
35
40
45
50
75
100
125
150
175
200
250
300
350
400
450
500
600
700
800
900
1000
Infinity
Expected Portfolio Variance
46.619
26.839
16.948
13.651
12.003
11.014
10.354
9.883
9.530
9.256
9.036
8.640
8.376
8.188
8.047
7.937
7.849
7.585
7.453
7.374
7.321
7.284
7.255
7.216
7.190
7.171
7.157
7.146
7.137
7.124
7.114
7.107
7.102
7.097
7.058
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