The standard deviation of the market-index portfolio is 25%. Stock A has a beta of 1.80 and a residual standard deviation of 35%.
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 6.23% in its residual standard deviation. (Do not round intermediate calculations. Round your answer to 4 decimal places.)