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

question 93

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 σ_M = 0.25 and R²_A = 0.25,the standard deviation of return of stock A is _________.

• A) 0.2025
• B) 0.2500
• C) 0.4500
• D) 0.8100
• E) none of these

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Definitions:

February

The second month of the year in the Gregorian calendar, commonly associated with the shortest month of 28 days, except in a leap year when it has 29 days.

Cash Collections

The process or total amount of money received by a company from its customers for goods or services offered.

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for.

May

The fifth month of the Julian and Gregorian calendars, often used in financial and operational planning calendars.