Doubts

Mock Midterm- 3e

Mock Midterm- 3e

by Salvador Valverde R. Azevedo Almeida -
Number of replies: 3

How do you go from here to here?


In reply to Salvador Valverde R. Azevedo Almeida

Re: Mock Midterm- 3e

by Julio Crego -
Check this post and let me know if it is still unclear
In reply to Julio Crego

Re: Mock Midterm- 3e

by Salvador Valverde R. Azevedo Almeida -
Ok Professor, I understood this step, what I don't get now is: how do you subtract the 2nd equation from the 1st if they're not the same.

In reply to Salvador Valverde R. Azevedo Almeida

Re: Mock Midterm- 3e

by Julio Crego -

I see. I can always subtract two equations, even if they are not the same. E.g

\(y = 3\)

\(x= 2\)

\(y-x = 3-2\)

If you are not convinced, you can use your preferred method. For instance, move \(\beta_GV(r_m)\)  and \(\frac{5}{2}\beta_HV(r_m)\) to the right-hand side so you get 0 in both left-hand sides and you can equate them. That will also lead to the same solution. You can also solve for \(\dfrac{5}{7}cov(r_G,r_H)\) in the first equation and substitute that value in the second equation, and it will lead to the same solution. 


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