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# 12. Compare the Markowitz Model of security selection to the Single Index Model. (a) (4 points) If there are n securities we can use to

## 12. Compare the Markowitz Model of security selection to the Single Index Model. (a) (4 points) If there are n securities we can use to construct a portfolio, how many different estimates to we need to construct the Input List in each model? Describe what estimates go into the construction of the input list in each model, and how many of each are needed. (b) (4 points) If there are only three risky securities in the universe of possible investments, in addition to the market index, the Markowitz model actually requires the calculation of fewer estimates than the Single Index Model. Is there any reason for a financial analyst to use the Single Index Model in this scenario? Why or why not? (c) (4 points) If there are only two risky securities in the universe of possible investments, in addition to the market index, is there any reason for a financial analyst to use the Single Index Model? Why or why not

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