The Index Model Has Been Estimated for Stocks a and B

question 7

Multiple Choice

The index model has been estimated for stocks A and B with the following results: R_A = 0.01 + 0.8R_M + e_A.
R_B = 0.02 + 1.2R_M + e_B.
Σ_M = 0.20; σ(e_A) = 0.20; σ(e_B) = 0.10.
The standard deviation for stock A is

• A) 0.0656.
• B) 0.0676.
• C) 0.2561.
• D) 0.2600.

---

Definitions:

Documented Outcome

The recorded result or impact of a treatment or intervention, often used to assess its effectiveness.

Family Member

A family member refers to someone who is part of one's immediate or extended family, including parents, siblings, spouses, and relatives by blood or marriage.