Hi guys,
On Part 2 Schweser Bk 2 P. 118, the correlation to market factor is “square-root” for beta but the question 5 in concept checker (P.123) is not. What is the reason behind? Do we need to calculate the square-root of the correlation for the calculation? Please advise. Thanks,
I think I know Sam what you are referring to. But having passed level II, you are aware from the portfolio concept that Correln.= Beta squared with a single factor model (in this case it is the market factor) as also the variance of mkt. error term is 1 always.
In my opinion the qs. in concept checker is worngly printed as it should be correln.=beta ^2, however do cross check. This is what I feel.
How is your progress so far?