The standard deviation of the market-index portfolio is 20%. Stock A has a beta of 2.00 and a residual standard deviation of 30%. Required: a. Calculate the total variance for an increase of 0.10 in its beta. (Do not round intermediate calculations.) Total variance 0.2264 b. Calculate the total variance for an increase of (expression error) percentage points in its residual standard deviation. (Do not round Intermediate calculations.) Total variance

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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The standard deviation of the market-index portfolio is 20%. Stock A has a beta of 2.00 and a residual standard deviation of 30%.
Required:
a. Calculate the total variance for an increase of 0.10 in its beta. (Do not round intermediate calculations.)
Total variance
0.2264
b. Calculate the total variance for an increase of (expression error) percentage points in its residual standard deviation. (Do not round
intermediate calculations.)
Total vanance
Transcribed Image Text:ces The standard deviation of the market-index portfolio is 20%. Stock A has a beta of 2.00 and a residual standard deviation of 30%. Required: a. Calculate the total variance for an increase of 0.10 in its beta. (Do not round intermediate calculations.) Total variance 0.2264 b. Calculate the total variance for an increase of (expression error) percentage points in its residual standard deviation. (Do not round intermediate calculations.) Total vanance
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