Intro

Assume that the single index model is valid. You've collected the following

information about excess returns for two stocks, A and B$,$ their residual standard

deviations, and the standard deviation of the macroeconomic factor, $M$ :

$R_A=-0\mathrm{.}1+0\mathrm{.}8R_M+e_A$

$R_B=0\mathrm{.}2+1\mathrm{.}5R_M+e_B$

$(e_A)=0\mathrm{.}4$

$(e_B)=0\mathrm{.}2$

${}_M=0\mathrm{.}2$

Part $1$

What is the standard deviation of stock $A?$

Try again

Part $2$

What is the standard deviation of stock B$?$