The CFAI text says to compute weighted average beta for a fund you take the betas of the securities in the fund, multiply them by their respective weights, and then divide the sum of these by the number of securities: w.a.Beta = (B1(W1) + B2(W2)…+Bn(Wn)) / (#securities) My question is… why are we dividing by the number of securities? Doesn’t the weighted average part happen with the percentage weights (i.e., “W1”)??? Does this make sense?
are you sure about the chapter, study session and page number? Not seeing this formula anywhere on that page you have given.
Volume 5 Page 132 Its not in “formula” form… its written in the text. Last paragraph I believe. Its also referenced on page 151 (same book). That time in “formula” form as well as text, but they seem to contradict each other. Thanks!
that looks like a very hedge fund specific term - and if that is the way to calculate it, so be it… luckily none of the LOS’s have the “Calculate” keyword.