The Index Model Has Been Estimated for Stock a with the Following

question 48

Multiple Choice

The index model has been estimated for stock A with the following results: R_A = 0.01 + 0.8R_M + e_A.
$\sigma$ _M = 0.20; $\sigma$ (e_A) = 0.10.
The standard deviation of the return for stock A is

• A)0.0356.
• B)0.1887.
• C)0.1600.
• D)0.6400.

---

Definitions:

Waste Products

Substances that are produced as byproducts of metabolic processes and need to be eliminated from the body.

Crushing

Compressing or squashing something with force so that it becomes distorted, broken, or compacted.

Diabetes Mellitus

A chronic condition characterized by elevated levels of glucose in the blood due to insulin deficiency or resistance.

Pyelonephritis

A kidney infection caused by bacteria ascending from the bladder to the kidneys.