The first part of the solution calculates the mean as 4.08 V=E[(x-mu)^2] The variance is calculated using 3.36. How did they get this? Is there a general formula I can use when calculating the market variance in these types of questions?
That 3.36% looks like a typo, as the end answers: variance = 2.2274%% = (1.508%)^2 mkt price of risk = (4.08 - 2.5)/1.508 = 1.048 are both correct!!
