The standard deviation of the market-index portfolio is 35%. Stock A has a beta of 1.40 and a residual standard deviation of 45%.

Required:

a. Calculate the total variance for an increase of 0.20 in its beta. (Do not round intermediate calculations.) 0.5161

b. Calculate the total variance for an increase of 3 percentage points in its residual standard deviation. (Do not round intermediate calculations.)