Can't do algebra for misfit active risk

CFA Level III Equities
#1

6%^2 = ((misfit active risk^2) + 5%^2)^1/2

do we use .06 or 6?

#2

Whichever way makes it clearer to you, as long as you’re consistent.

0.06² = mar² + 0.05²

0.0036 = mar² + 0.0025

0.0011 = mar²

mar = √0.0011 = 0.033166 = 3.3166%

– or –

6² = mar² + 5²

36 = mar² + 25

11 = mar²

mar = √11 = 3.3166, meaning 3.3166%

#3

thank you magician!

#4

You’re quite welcome.