Mock 2 final question (don't look if you haven't done)

part, question, equation, standard

I’m convinced that the answer for the last question in mock 2 was wrong.
I’m not going to reproduce the question, but it was a portfolio standard deviation calculation where they used the formula:
std dev = [(w1^2)*(sdev1^2)+ (w1^2)*(sdev2^2) + 2 * w1 * w2 * sdev1 * sdev2 * Covariance of 1 & 2] ^ 1/2
Now, I thought that if you had the covariance, you leave out the sdev1 and sdev2 in the final part of the equation?
Am I going mad?

相关主题：

. Please help, EOC FCFF Question 21-22

. Variance of equally weighted portfolo question

. standard dev of 2 corner portfolios combined

. HELP! i want to believe that this question is wrong

. Ethics - Confidentiality

YAhmed

CFA Candidates

Rank: 2

UID: 223437
帖子: 336
主题: 5
注册时间: 2011-7-11
最后登录: 2016-4-19

2^#

发表于 2013-4-17 19:07 | 只看该作者

No, you’re not going mad. You’re right. The formula either has product of 2, covariance and weights, or product of 2, correlation and stdv of each asset.

TOP

svgleeson

CFA Candidates

Rank: 2

UID: 223348
帖子: 250
主题: 63
注册时间: 2011-7-11
最后登录: 2013-8-22

3^#

发表于 2013-4-17 19:07 | 只看该作者

don’t worry, found a post from June which confirmed my belief that CFAI was wrong
I wasted so much time on this one, both during the mock and afterwards. Thanks CFAI!

TOP

spartanag07