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

question 39

Multiple Choice

The index model for stock B has been estimated with the following result: R_B = 0.01 + 1.1R_M + e_B.
If $\sigma$ _M = 0.20 andR²_B = 0.50, the standard deviation of the return on stock B is

• A)0.1111.
• B)0.2111.
• C)0.3111.
• D)0.4111.

---

Definitions:

Social Order

A societal concept that implies a set of linked social structures, practices, and institutions which collectively ensure and maintain stability and predictability.

Identity Fusion

A profound feeling of oneness with a group and a perception that one’s personal identity and group identity are essentially the same. It is a strong motivator of collective action.

Ingroup Bias

The tendency to favor members of one's own group over those from different groups.

Power Distance

A term used in cultural studies and sociology to describe the extent to which less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally.