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:

Telencephalon

The largest part of the brain, encompassing the cerebral cortex and several subcortical structures, responsible for complex sensory and neural functions.

Basal Ganglia

Group of structures in the brain involved in coordinating movement, behavior, and emotion.

Limbic System

The limbic system is a complex set of brain structures located on both sides of the thalamus, directly beneath the cerebrum, involved in emotion, behavior, motivation, long-term memory, and olfaction.

Red Nucleus

A structure within the midbrain involved in motor coordination, playing a role in the control of limb movements.