Q12 part a) Reading 25 Alt. Inv. page 112 why multiple sqrt 12??

Hi guys,

Can someone please explain the maths to me behind why we mutliple the downside deviation by the sqrt of 12, i.e. the sqrt of n.

I would rather understand than just commit it to memory for the exam.



deviation is like std deviation.

square (monthly std deviation) - to get monthly variance

that multiplied by 12 = annual variance

so annual std deviation = monthly deviation * Sqrt(12)

Now that cpk123 said so too, I hope you’re happy with that lol

Thanks @cpk123 and @Godism17 hehe