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

question 5

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) 0.1887.
• C) 0.1600.
• D) 0.6400.

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