Downside Deviation - Reading 31, Q 12

CFA Level III
#1

I calculated downside deviation using a mean monthly return of 0.64%, and got SQRT(10.566/11)=0.98%, annualized into 3.4%.

In their solution, they arbitrarily use a hurdle rate of 5%, where did they get that? I thought you are supposed to use the mean monthly RoR?

#2

Footnote on p 110. Bad questioner, bad dog!

#3

tiny print just to make you waste time. in the exam too , look for CFA to confuse you by giving bits and pieces you need in one paragraph for a question some paragraphs away ( with questions in between ) . This is in the AM paper . makes you waste time searching for it. typical case is they will give risk free rate somewhere else than where you’re looking

#4

Wow. Seriously. wtf.

Thanks guys

#5

WTF,… I wasted my time too day before yday on this same question :((((

Thank you friends!

#6

Will they always give you a a reference/target rate? If they do not, should you just use the RFR?