CFALA
Review:
Tips
for
using
the
TI
calculator
2/9/2015
By
David
Cary
5
CFA Society Los Angeles
9
ADDING, SUBTRACTING, MULTIPLYING AND
DIVIDING TO MEMORIES!
• The following steps can also be done with memories, but be
careful, one missed step messes up the numbers.
3 [STO][1] puts 3 in Memory #1
(assume each step below is done in sequence).
Then if you press 4 [STO] [+] 1, the value in #1 will be 7.00, (3+4=7)
Then if you press 4 [STO] [
] 1, the value in #1 will be 3.00, (7
4=3)
Then if you press 4 [STO] [x] 1, the value in #1 will be 12.00,
(3x4=12) and
Then if you press 4 [STO][
] 1, the value in #1 will be 3.00 (12
4=3).
9
CFA Society Los Angeles
10
CALCULATING MEANS AND COVARIANCES OF
TWO ASSET PORTFOLIO
• Example from D.Cary’s Level I CFALA review
lecture notes, SS 2, Reading 8:
• The question is to find the expected return “r
p
” and
the variance (and standard deviation) of this portfolio.
• Before doing the calculations, look at the numbers carefully.
A weight of 75% will be entered as 0.75
A return of 20% can be entered as 20 and the answer will be in “%” value or
as 0.20 and the answer will be in decimal value “0.00”.
Note if they give you Variance or Standard Deviation. For part of the
equations used you might need variance and other parts might need
standard deviation.
Also note if they give you the covariance or correlation of the two assets.
Remember that covariance = correlation x s
1
x s
2
.
The following pages use “s
12
” to denote covariance.
10
1
2
w
75%
25%
r
20%
12%
var
625
196
Covar
120
