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

question 78

Multiple Choice

The index model has been estimated for stock A with the following results: R_A = 0.01 + 0.8R_M + e_A.
Σ_M = 0.20; σ(e_A) = 0.10.
The standard deviation of the return for stock A is

• A)0.0356.
• B)0.1886.
• C)0.1600.
• D)0.6400.

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Definitions:

Imports

Goods and services brought into a country from abroad for sale.

Exports

Goods and services produced in one country and sold to buyers in another, contributing to a country's GDP.

Purchasing-Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach to assess their purchasing power equivalence.

Inconsistency

Lack of coherence or uniformity in actions, statements, or conditions.