1. 

   Actuary_140 Member

   Hi,
   
   I hope I'm not missing something simple here - - > in the solutions on pg13 of the notes (Chp 7), what happens to the (beta(i)^2 * VM) in the bracket for the specific risk?
   
   In the next workings line, only the (V error term, i) remains. Does the variable above go to zero?
   
   Thanks

    

   Actuary_140, Aug 31, 2021

   #1
2. 

   Steve Hales ActEd Tutor Staff Member

   Hi
   Look at the indicies of the double summation terms. The \(\beta_i^2 V_M\) term is captured by the double summation when the \(j \neq i\) condition is removed.
   Hope that helps.

    

   Steve Hales, Sep 1, 2021

   #2

   Actuary_140 likes this.

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