The standard deviation of the market-index portfolio is 30%. Stock A has a beta of 1.50 and a residual standard deviation of 40%. Required: a. Calculate the total variance for an increase of 0.10 in its beta. (Do not round intermediate calculations.) Total variance 0.3904 Total variance .……..... b. Calculate the total variance for an increase of 3 percentage points in its residual standard deviation. (Do not round intermediate calculations.)

The standard deviation of the market-index portfolio is 30%. Stock A has a beta of 1.50 and a residual standard deviation of 40%. Required: a. Calculate the total variance for an increase of 0.10 in its beta. (Do not round intermediate calculations.) Total variance 0.3904 Total variance .……..... b. Calculate the total variance for an increase of 3 percentage points in its residual standard deviation. (Do not round intermediate calculations.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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