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chiclarence says

in the examples we have had so far we are combining two investments or chose one from a group to combine with an already existing investment. in real life we may have to combine more than 2 investments. is there a formula for this?

thank you

olierazz says

i’m thinking you could improve the given formula. since the current formula was given as ‘WaSa+WbSb…’ only, maybe we could add ‘WcSc’ so forth?

johnmoffat says

It could be, but please make sure you have noticed that the Course Notes stress that the examiner has said that he will no longer ask portfolio calculations (and will no longer therefore give the formula). However he can expect you to be able to explain the idea.

That is the reason that I have left the chapter in the notes (and the lectures) – not because you can be asked for the arithmetic, but because it might help you make sense of the idea behind it.

Hasnain says

The Example you are mentioning on page no 155

I’m unble to find it there!

bowe says

Thanks for clarifying on covariance.

odette123 says

What is the correct answer 7.33% or 2.71% for current +A?

johnmoffat says

@odette123, 7.33% (you can check the answers at the back of the course notes)

odette123 says

I had a problem, I know that the best thing to do was to work the question out however just looking at the options. A has a return of 8% and risk of 5% while B provide the same return for a lower risk and also has a positive correlation with Janis current protfolio.

Could i have use that to eliminate A immediate/

johnmoffat says

@odette123, No you cannot eliminate A immediately. Because there is positive correlation, it could mean that the total risk ended up higher. The only way you can check for certain is by calculating the total risk for both alternatives.