The standard deviation of the market$-$index portfolio is $35\%.$ Stock A has a beta of $1\mathrm{.}40$ and a residual standard deviation of $45\%.$The standard deviation of the market$-$index portfolio is $35\%.$ Stock A has a beta of $1\mathrm{.}40$ and a residualThe standard deviation of the market$-$index portfolio is $35\%.$ Stock A has a beta of $1\mathrm{.}40$ and a residual

standard deviation of $45\%.$

Required:

a$.$ Calculate the total variance for an increase of $0\mathrm{.}20$ in its beta. $($Do not round intermediate

calculations.$)$

Answer is complete and correct.

b$.$ Calculate the total variance for an increase of $3$ percentage points in its residual standard deviation. $($Do

not round intermediate calculations.$)$