@alta12 @vincentt https://www.dropbox.com/s/qpla41p0t33ljwe/Screenshot%202014-05-24%2022.24.25.png For the solution to the problem where he is asking for utility, I think schweser has the formula wrong. He has given as E(R)-0.5*Riskfactor*sigma square In our CFAI text book we have it as E(R)-0.005*Riskfactor*sigma square Can you guys confirm if I am right?

0.5 and 0.005 can be used interchangeably. If your standard deviation is 12% instead of 0.12 you should use 0.005. However, if you decided to use 0.5 you should use 0.12.

A CFA Level 3 Discussion About Schweser-Vol-2-Paper-2-Question-6

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This topic has 2 replies, 2 voices, and was last updated Oct-178:32 pm by RaviVooda.

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- RaviVooda
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  - CFA Level 3
  20 Oct 2017 at 8:28 pm
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  @alta12 @vincentt‌
  
  https://www.dropbox.com/s/qpla41p0t33ljwe/Screenshot%202014-05-24%2022.24.25.png
  
  For the solution to the problem where he is asking for utility, I think schweser has the formula wrong. He has given as
  
  E(R)-0.5*Riskfactor*sigma square
  
  In our CFAI text book we have it as E(R)-0.005*Riskfactor*sigma square
  
  Can you guys confirm if I am right?
- vincentt
  Participant
  - CFA Level 3
  20 Oct 2017 at 8:30 pm
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  0.5 and 0.005 can be used interchangeably.
  
  If your standard deviation is 12% instead of 0.12 you should use 0.005. However, if you decided to use 0.5 you should use 0.12.
- RaviVooda
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  - CFA Level 3
  20 Oct 2017 at 8:32 pm
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  @vincentt, understood thanks.
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