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

question 76

Multiple Choice

The index model for stock A has been estimated with the following result:R_A = 0.01 + 0.94R_M + e_AIf σ_M = 0.30 and R²_A = 0.28, the standard deviation of return of stock A is

• A) 0.2025.
• B) 0.2500.
• C) 0.4500.
• D) 0.5329.

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Definitions:

Galvanic Skin Response

Galvanic skin response is a physiological reaction that causes the conductivity of the skin to change in response to emotional arousal, stress, or stimulation.

Physiological Component

The aspect of something, such as an emotion or response, that involves bodily functions and reactions.

Cognitive Component

The aspect of attitudes and beliefs that involves the mental processing of knowledge, information, and belief systems.

Physiological Component

Refers to the physical and biological aspects that contribute to an organism's functions and processes.