The index model has been estimated for stocks A and B with the following results:

RA $=0\mathrm{.}03+0\mathrm{.}7$RM $+$ eA$.$

RB $=-0\mathrm{.}02+0\mathrm{.}9$RM $+$ eB$.$

$\backslash$sigma M $=0\mathrm{.}35$; $\backslash$sigma $($eA$)=0\mathrm{.}20$; $\backslash$sigma $($eB$)=0\mathrm{.}10.$

$39)$ The standard deviations of stocks A and B are

a$)0\mathrm{.}67$ and $0\mathrm{.}23$ respectively

b$)0\mathrm{.}32$ and $0\mathrm{.}33$ respectively

c$)0\mathrm{.}60$ and $0\mathrm{.}23$ respectively

d$)0\mathrm{.}56$ and $0\mathrm{.}45$ respectively

$40)$ The beta of stocks A and B are

a$)0\mathrm{.}20$ and $0\mathrm{.}10$ respectively

b$)0\mathrm{.}03$ and $0\mathrm{.}01$ respectively

c$)0\mathrm{.}70$ and $0\mathrm{.}90$ respectively

d$)0\mathrm{.}51$ and $0\mathrm{.}35$ respectively

$41)$ According to the single index model stock A is

a$)$ overpriced

b$)$ underpriced

c$)$ priced at equilibrium

d$)$ neither of the above

$42)$ According to the single index model stock B is

a$)$ overpriced

b$)$ underpriced

c$)$ priced at equilibrium

d$)$ neither of the above