The Treynor-Black model requires estimates of

A) alpha/beta.
B) alpha/beta/residual variance.
C) beta/residual variance.
D) alpha/residual variance.

Treynor-Black Model

A special case of the Markowitz model of efficient diversification, derived by assuming returns are generated by the index model.

Residual Variance

The variance of the error terms in a regression model, representing the amount of variation that cannot be explained by the model's inputs.

Alpha/Beta

Measures in finance; Alpha represents the strategy's returns above the benchmark, whereas Beta indicates the volatility relative to the market.