Security Y Has a Total Variance of 225

question 3

Multiple Choice

Security Y has a total variance of 225. Its beta is 1.2 and the market variance is 100. The standard deviation of its random error term is

• A) 6%.
• B) 14%.
• C) 3%.
• D) 9%.

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Definitions:

Wealth Effect

The change in spending that accompanies a change in perceived wealth, usually through market price changes of assets like homes or investments.

Aggregate Demand

The complete summon for goods and services in an economy, quantified at a particular level of overall price throughout a definite period.

Aggregate Supply

The total supply of goods and services that firms in an economy plan on selling during a specific time period, which can be influenced by factors like production technology and labor availability.

Increased Immigration

A scenario where the number of people entering a country to live permanently exceeds the number leaving, affecting various aspects of the economy, including the labor market.