Long Term Volatility Formula
Monthly
Volatility = 12%
Value
of assets = 2,000,000
Calculate
annual variation in assets?
Solution
In
first place the long term volatility i.e. annual shall be calculated and then
that volatility would be applied to calculate the possible variation in asset.
Long
Term Volatility annual = Short Term Volatility x√12
=
.12x3.464
=41.56%
Asset
value variation = 2,000,000 x 41.56%
=831200
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