- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 4. Common Probability Distributions
- Subject 6. Normal Distribution

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**CFA Practice Question**

Which of the following does (do) not describe a multivariate normal distribution for the return on n stocks?

II. n variances

III. sum of n mean returns

IV. n(n-1)/2 correlations

I. n mean returns

II. n variances

III. sum of n mean returns

IV. n(n-1)/2 correlations

Correct Answer: III only

A multivariate normal distribution is completely specified if one has the lists for the mean returns, variances, and correlations or covariances between the variables.

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