Question: Based on Modern Portfolio Theory, explain what the variance and covariance terms are capturing. Which is a more relevant measure in a well-diversified portfolio? Briefly

Based on Modern Portfolio Theory, explain what the variance and covariance terms are capturing. Which is a more relevant measure in a well-diversified portfolio? Briefly explain. If a portfolio has 5 individual stocks in it, how many total variance and covariance terms are there?

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