In ICAI new SM, they have used two different formula for computing Beta of a security, answer is coming different under both the formula, so just wanted to know which formula to use when?
Formula1: {[Summation(X Y) – n(AvgX.AvgY)]/[Summation(Y²) – n(Avg)²]}
Formula2: {Covariance(X,Y)/SigmaY²}
Thanks in advance for the reply.
Hi,
U can use any formula depending on the information given, if cov is provided use second one else first one