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Consider an environment of 30 individual risky securities and one risk free asset. One investor is selecting between the Markowitz mean-variance frontier framework and the
Consider an environment of 30 individual risky securities and one risk free asset. One investor is selecting between the Markowitz mean-variance frontier framework and the index model in the portfolio analysis. Answer the following questions:
(a) How many parameters are used as the input to construct the mean-variance frontier?
(b) How many inputs are used for the index model?
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