The index model has been estimated for stocks A and B with the following results:
RA= 0.01 + 0.8RM+ eA
RB= 0.02 + 1.2RM+ eB
ΒM= 0.20 β(eA) = 0.20 β (eB) = 0.10
The standard deviation for stock A is __________.
A) 0.0656
B) 0.0676
C) 0.2561
D) 0.2600
E) none of the above
Correct Answer:
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