Hey guys The portfolio management study session introduces another formula for working out the variance of a two asset portfolio. Qp = w2q2 +w2q2 + 2w1w1q1q2P1,2 Qp = w2q2+w2q2+2w1w2Cov1,2 My question is which formula do you use for the exam? As you will notice one uses sd’s in the latter part of the formula so both methods will give conflicting answers.

the two formulas you will see for Q are the same one takes the cov as input and one takes the corrolation as input given that covar=corrolation * q1 *q2 they are the same

omg cant believe i didnt recognise that. so stupid. thanks alot ahmad!

Good question though!!