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

question 70

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 σ_M = 0.20 and R²_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
• E) none of these

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Definitions:

Repayment Plan

An agreement between a borrower and lender detailing the manner in which a loan will be paid back, often including the schedule, amounts, and duration.

Discharged of the Rest

This term could refer to the legal release from the remainder of an obligation or debt when conditions have been partially met or circumstances have changed, but is not a standard legal term and requires more specific context for accurate definition.

Financial Situation

Refers to the current state of an individual's or organization's finances, encompassing assets, liabilities, income, and expenses.

Bankruptcy Trustee

An appointed official who oversees and manages the estate of a debtor during bankruptcy proceedings, including the distribution of assets to creditors.