shouldn’t the answer be the square root of 11.3% for SD of 2 asset pflo
answer looks to be variance, unless i’m hallucinating – entirely possible.
what the hell? is no one doing mocks?
can someone chime in here?
The standard deviation is 0.113, but the explanation of the formula is incorrect.
If you do the math, variance is 0.01279. Sqrt is 0.113.
The answer is standard deviation. You have to take the square root of portfolio variance to arrive at 11.3%.
Hehe, I was just working on that one. I am amazed at how tricky they are with some of these questions. It took me forever to figure out in Q9 that “one period” does not equal 60 days, because I couldn’t figure out why they were dividing by 1.03 instead of 1.00487. I was almost certain the answer was wrong, because the option was clearly stated to be 60 days in the vignette, but then I saw in the question it said “one period.” When I finally saw the reason, I almost yelled out, “You bastards!!!” You really have to pay attention to the wording.
It’s also interesting to figure out how the exam arrived at the incorrect answers. Often times it is just the result of stupid mistakes that no one would ever make – that is encouraging. Like in yoda’s question on standard deviation, one of the answers assumes you just take the weighted average of the standard deviations for the two stocks, so really (because no one would ever do that), there is only 2 answers in that question to choose from.
Hi guys,
Isnt the next question also wrong. They say the Capm for PSMG = 2% +1.2(12%-2%) = 12% when it is actually 14%…
Hi guys,
Isnt the next question also wrong. They say the Capm for PSMG = 2% +1.2(12%-2%) = 12% when it is actually 14%…