Sfm-three stock covariance matrix

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Hi experts

In portfolio chapter, i am confused with beta calculations as in they have taken simple average of beta whereas weighted avg. should be used.

Pls. explain why they have taken just simple avg. of beta?

Thanks

 

 

See my first reply on page 2.

There is no logic for this. But weighted average beta is appropriate.

Ok this mean i can use weighted beta only in exams na Thanks again sir!
@ gaurav... u can use weighted beta in exams provided u state it in assumption part

Yes, definitely. If in some of solved problems in PM you will find that average beta is used but you can & should used weighted average beta. There is no reason your answer has to 'match' that of ICAI as long as you have done it the right way.

@ Ms. Jyotsna- Thanks alot!

@ Mr. Sunil- Yes, PM has solved few sums by taking simple & weighted avg as well this was the reason for confusion.....anyways Thanks a ton sir for your valuable time giving.

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