Economics Topic test-CME

CFA Level III Economics
#1

The first q here is posing somewhat of a challenge for me:

Q 1 Calculation of beta: the formula as I remember is beta is = Cov ( Ri, Rm)\Variance of RM.

Here, variance of M is: σ2M = 0.041/0.36 = 0.1139 σ(RM) = square root of(0.1139) = 0.3375 ( not 0.0130) - given in the answer.

So beta cal is βi = 0.0075/0.3375 = 0.022 and not 0.58 as given in the answer.

#2

Why square root from stdev since you need variance to get beta? Thus (0.1139)^2 is 0.0130 and Beta is Cov,i,m/Var,m.