Equity - Blume method beta calc

I didn’t know what Blume was either, but they asked for adjusted beta which is:
(2/3)Beta + 1/3*1 = 1.27
 
I don’t know but this is what I did:
2/3* provided beta + .33
I think I read that in the Secret Sauce
 
I used 50% historic beta, 50% 1 but I think that this is the wrong proportions.
 
the only formula I could remember is the 2/3 + 1/3 beta
 
one of the questions whose answer I was pretty confident abt
 
Wow! I blew that question. All I could think of was who the hell is this Blume Mofo?
 
I answered 1.27, but to get that exact number you have to have b0=.325 not 1/3 kinda threw me at first so I was like WTF so I set up the equation with each answer choice as the solution to figure out what b0 and 1-b1 was for each choice (answer choice b had b0=.5, and a had something like b0=.1325 or something).
 
The answer was 1.27?
Wow, I got that right.
I used my calculator’s random # function, it came up as like .9 so i put down C, lol (0 - .33 = A, .33 - 67 = B, .67 - 1 = C)
 
yeah, I used 1/3. 2/3 and don’t know what’s the hell of Blume
I think if I get it wrong, most of people would use the same anyway
answer I remember is 1.26666 ,so 1.27
 
Blume was the first one to write papers about the mean reversion of beta and came up with the adjusted beta. So 0.33 + 0.67 * beta was Blume’s method.
I wrote a paper about this at University so it immediately was clear to me but it was only one line in Schweser (about Blume) so it’s logical few did. I would as well if it weren’t for that paper (and my thesis which was all about beta!).
 
Lurky, thanks to verify for us, another question in the pocket:D
you should write in the exam paper” I own this method:D”
 
kevincwang Wrote:
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> Lurky, thanks to verify for us, another question
> in the pocket:D
>
> you should write in the exam paper” I own this
> method:D”
If only I owned the exam. I was very confident coming out. Gave away some easy questions in the AM because I rushed through (was done in less than 1.5 hours) and realized later I did some things wrong as a result. In the PM I took my time and did rather well. Now reading the forum I see I missed a lot of things regarding the questions. So I gave the correct answers to the wrong question because of misinterpretations or just overlooking things. Seriously frustrating! CFA: Just come up with questions that are difficult to answer instead of difficult questions. There is a difference…
Ah well, all depends on the MPS now. The questions cost me 10% in score.
 
that always happens but if you feel confident coming outside, most likely you had it.
I missed PVGO in the morning, was so confused whether to use E1 and E0 and trying to be a a smart ass to challenge the formula I remembered:D
again 70 to pass and it is all good
 
I was confident based on the questions I was sure I had right. Not funny when a lot of them appear to be wrong after all.
Ah well. Let’s forget and await the 18th of August!
 
chowder Wrote:
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> wtf is Blume method?
Is Blume in the CFAI curriculum? Not in the index, and at a quick scan on beta stuff, can’t find it.
 
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