Answer the following questions assuming the single index


Answer the following questions assuming the single index model holds.

A. Assume the correlation coefficient between a stock, XYZ, and the market index is 0.70. What percentage of XYZ’s total risk is firm specific?

B. Both beta and standard deviation are measures of risk. How do these two measures differ? Specifically what type(s) of risk does each statistic capture?

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Business Economics: Answer the following questions assuming the single index
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