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Hi,

The Weighted-Variance of the Residual Risk =

*In Reference to R10.P1.T1.BODIE_CH10_DIVERSIFICATION_of_RESIDUAL_RISK :-*The Weighted-Variance of the Residual Risk =

The Avg-Volatility =

So, the Last term should be just (40% ) ^2 as the 40% is the AVG-Volatility..So the AVG-Variance is just the Square of the AVG-Volatility..?

*Avg-Variance of Residual Risk*/ N =[ (Std-Dev of Residual Risk) ^ 2 / N ] / NThe Avg-Volatility =

**( Std-Dev/ N )**= 40%So, the Last term should be just (40% ) ^2 as the 40% is the AVG-Volatility..So the AVG-Variance is just the Square of the AVG-Volatility..?

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