CFA Reading 34 pg 368 #12 How is hurdle rate and downside deviation calculatied? Where is 28.78 and 65.04 taken from?
Downside deviation is the same as std deviation except for the fact that you only include the returns that are below the Hurdle Rate or Required Return. At the top of the table 5% annual T-bill rate is given as the hurdle rate which equates to a +0.41667% monthly return (5/12). Now for both use Sum(X-0.41667) to get the 28.78 for the Fund and 65.04 for the Index. For the fund the only returns you would use are -2,-2,-1,-1,+0.4,-3.2. Do the math it works 
i’m not getting it … for the hedge fund -2.417 -2.417 -1.417 -1.417 -0.017 -3.617 Total -11.484 … square it and the answer is not 28.78 what am i doing wrong. its probably something very simple but i can’t spot my mistake and i just spent half an hour on this 
bips Wrote: ------------------------------------------------------- > i’m not getting it … > > for the hedge fund > > -2.417 > -2.417 > -1.417 > -1.417 > -0.017 > -3.617 > > Total -11.484 … square it and the answer is not > 28.78 > what am i doing wrong. its probably something very > simple but i can’t spot my mistake and i just > spent half an hour on this This is not how you calculate. You cannot sum the terms and then square. You need to square each term and then sum them.
As FSA-Sucka states You need to Square each term first then add them up and then take the square root.