In the portfolio management section, Kaplan and CFAI materials give me different ways to calculate Beta. When I go through the Kaplan Qbank and then the CFAI TT, I run into questions on calculating Beta, and depending on which way I do it, I get conflicting answers. From the Schweser notes, Beta is calculated in two ways: 1. Beta = Corr X (SDi/SDm), or 2. Beta= (COVim/VARm) CFAI gives it to me as such: (CORRm X SDi)/ SDm Any thoughts?
They’re all the same thing. It’s just the algebraic masturbation.
Beta = Cov(i,m)/Var(m)
Cov(i,m) = Corr(i,m)*σiσm
Beta = Corr(i,m)*σiσm/σ2m
Beta = Corr(i,m)*σi/σm