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

question 57

Multiple Choice

The index model for stock A has been estimated with the following result: R_A = 0.01 + 0.9R_M + e_A.
If $\sigma$ _M = 0.25 andR²_A = 0.25, the standard deviation of return of stock A is

• A)0.2025.
• B)0.2500.
• C)0.4500.
• D)0.8100.

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Definitions:

Positive Skew

A distribution shape where most values are clustered towards the left, with a long tail to the right.

Median

A statistical measure representing the middle value in a data set, where half the numbers are above and half are below.

Absolute Zero

The lowest possible temperature where nothing could be colder and no heat energy remains in a substance, equivalent to -273.15°C or 0 Kelvin.

Nominal Data

A type of data that categorizes variables without a natural order or ranking among the categories.