Chapter 7 Beta question
Michael McKenney ( mmckenne@ins.state.pa.us )
Thu, 18 Jun 1998 12:35:11 -0400
The text, in chapter 7 p.162-164, defines a security's Beta realative to a
portfolio as the covariance of that security to the portfolio divided by
the portfolio's variance. However, the Hodges and D'Ambrosio study manual
on p.59 in the 2nd worked example, defines it as the covariance
of that security to the portfolio divided by each the portfolio's variance
and the proportion of the security to the portfolio.
Has anyone else noticed this? Am I (and my co-worker) crazy, or does seem
to be a contradiction of the text?
P.S. if you visit the CAS discussion forum, I guess now you know I am
'early bird.'