I know the formula of cov = Beta x Beta x Variance but my question is how to express variance here. Obviously variance = st dev^2 so my question is if st dev is 10 should variance be (.10)^2 or 10^2? I feel like I’ve seen it both ways and I’m always confused on how to treat this.
0.1^2
This illustrates how irritatingly sloppy finance people can be; there is no reason whatsoever that if they mean that σ = 10% they should write σ = 10. It’s stupid.
Use σ = 10%, so σ² = 0.01.
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