Portfolio Standard Deviation Formula

[w2krs5]

Portfolio Standard Deviation Formula

Date: November 3, 2008 07:59AM


Is it important to have the portfolio standard deviation formula memorized and to be able to derive covariance from a set of numbers? Schweser has numerous example in the qBank which cannot possibly be calculated within 90 seconds. Any feedback would be great as I'd like to be efficient with my time the next few weeks.

[ziukxy]

Date: November 3, 2008 08:24AM


i think this is pretty central to portfolio management and I could probably do a normal portfolio sd calulation in about 90s. That said, the sort of question you would probably get in the exam is more likely to ask what happens to s.d. if you increase the weighting of a risk free asset or something quasi-mathematical like that

[windwin]

Date: November 3, 2008 10:41AM


you can calculate the standard deviation in your BA II plus in less than 20 seconds. Search the instruction manual at statistics and you will see.

Alex.

[riverlong]

Date: November 3, 2008 10:43AM


neagu.alexandru Wrote:
-------------------------------------------------------
> you can calculate the standard deviation in your
> BA II plus in less than 20 seconds. Search the
> instruction manual at statistics and you will
> see.
>
> Alex.

sorry, but that's waste of time. focus on concepts and understand relationships.

[blackcoffee]

Date: November 3, 2008 12:46PM


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> Is it important to have the portfolio standard
> deviation formula memorized and to be able to
> derive covariance from a set of numbers?

hi, I guess it wouldn't make much sense to ask
you to calculate covariance.

But a formula like

Var(X+Y) = Var(X) + Var(Y) + 2 x Cov(X,Y)

shouldn't be too complicated to memorize.