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For a One-Factor Model, an Analyst Finds the Variance of the Factor

Question 12

Multiple Choice

For a one-factor model, an analyst finds the variance of the factor is 6 and the variance of the random error is 10. If the total variance for the security is 106, its sensitivity to the factor is


A) 2.
B) 5.
C) 6.
D) 4.

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