The standard deviation of the market-index portfolio is 20%. Stock A has a beta of 1.5 and a residual standard deviation of 30%.
a. Calculate the total variance for an increase of .15 in its beta. (Do not round intermediate calculations. Round your answer to 4 decimal places.)
Total variance
b. Calculate the total variance for an increase of 3% in its residual standard deviation. (Do not round intermediate calculations. Round your answer to 4 decimal places.)
Total variance