$(6$ pts; fill the blank with numbers or algebraic expressions$)$ For a portfolio of $8$ individual securities$,$ the portfolio risk as measured by the variance of portfolio return $($see formula $7\mathrm{.}16$ in slide $8$ of Portfolio Diversification Presentation$)$ is the sum of terms, out of which terms are variance terms and terms are covariance terms. For example, the term in row $2$ and column $5$ is

$(\frac{M}{C})$ That's why there are covariance terms than variance terms, and portfolio risk is thus dominated by of individual securities$.$

A$.$ more; variances

B$.$ less; variances

C$.$ more; covariances

D$.$ less; covariances

$(3$ pts; fill the blank$)$ BP trades on London Stock Exchange. Over the past year, the stock has enjoyed a $10$ percent return in pound terms, but over the same period, the dollar has appreciated $18$ percent. The investor's dollar rate of return is $\%.$

$(2$ pts$)$ One major finding from textbook Exhibit $15\mathrm{.}2$ is that stock returns tend to be much correlated between countries than within a country.

A$.$ more

B$.$ less

$(2$ pts$)$ The weights composition of an OIP is solved by optimizing $($i$.$e$,,$ to maximize or to minimize$)$ the $q,$ with respect to the portfolio weights.

A$.$ portfolio risk

B$.$ portfolio return

C$.$ portfolio Sharpe ratio