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The standard deviation of the market-index portfolio is 45%. Stock A has a beta of 1.20...

The standard deviation of the market-index portfolio is 45%. Stock A has a beta of 1.20 and a residual standard deviation of 55%.


a. Calculate the total variance for an increase of 0.20 in its beta. (Do not round intermediate calculations. Round your answer to 4 decimal places.)



b. Calculate the total variance for an increase of 8.86% in its residual standard deviation. (Do not round intermediate calculations. Round your answer to 4 decimal places.)

I got .6994 for both but it keeps saying im wrong.

Solutions

Expert Solution

As far as i know, first and second answer should match, but i am getting, both answers different. May be faculty has changed value a bit.

check my calculations. Thank you.

jeff jeffy answered 9 months ago
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