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Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA 1.68 +0.70RM + A RB 1.8%+ 0.90RM + eB OM= 22%; R-squareд = 0.20; R-squareg = 0.15 What is the covariance between each stock and the market index? Note: Calculate using numbers in decimal form, not percentages. For example use "20" for calculation if standard deviation is provided as 20%. Do not round your intermediate calculations. Round your answers to nearest whole number. Stock A Covariance

Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA 1.68 +0.70RM + A RB 1.8%+ 0.90RM + eB OM= 22%; R-squareд = 0.20; R-squareg = 0.15 What is the covariance between each stock and the market index? Note: Calculate using numbers in decimal form, not percentages. For example use "20" for calculation if standard deviation is provided as 20%. Do not round your intermediate calculations. Round your answers to nearest whole number. Stock A Covariance

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 1.6% +0.70RM + eA RB = -1.8% + 0.90RM + eB OM = 22%; R-squareд = 0.20; R-square = 0.15 What is the covariance between each stock and the market index? Note: Calculate using numbers in decimal form, not percentages. For example use "20" for calculation if standard deviation is provided as 20%. Do not round your intermediate calculations. Round your answers to nearest whole number. Stock A Stock B Covariance
Transcribed Image Text:Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 1.6% +0.70RM + eA RB = -1.8% + 0.90RM + eB OM = 22%; R-squareд = 0.20; R-square = 0.15 What is the covariance between each stock and the market index? Note: Calculate using numbers in decimal form, not percentages. For example use "20" for calculation if standard deviation is provided as 20%. Do not round your intermediate calculations. Round your answers to nearest whole number. Stock A Stock B Covariance
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