Anyone have any good tricks for 2 asset portfolio variance questions? After some research I realized that there is no shortcut via the BA II plus when probabilities are used. However, does anyone have any good process of elimination techniques that could be used to rule out 2 of the 3 answers? The formual is not difficult but it takes me a solid 3.5-5 minutes to solve these types of problems (considering I input the data correctly).
Thanks in advance!
I have the same problem and also did not find a shortcut via the BA II when probabilities other than 50% are used. Best I have come up with so far is practicing it regularly to reduce the probability of input errors and to speed up the process.
Not a shortcut so much as a sometimes-tested concept - if the correlation coefficient is 1, the portfolio std deviation is a weighted average of the individual asset std deviations. So in this case, you have a simpler calculation.