The index model has been estimated for stocks A and B with the following results: RA=0.12 +0.670RM+ еA RB=0.04 +1.512RM + еB °M=0.330 σ(eд) = 0.20 σ(eB) = 0.10 What is the covariance between each stock and the market index? (Round your answers to 4 decimal places.) Stock A covariance Stock B covariance

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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The index model has been estimated for stocks A and B with the following results:
= 0.12 +0.670RM+еA
RA=
RB=0.04 +1.512RM + еB
°M= 0.330
σ(eд) = 0.20
σ(eB) = 0.10
What is the covariance between each stock and the market index? (Round your answers to 4
decimal places.)
Stock A covariance
Stock B covariance
Transcribed Image Text:The index model has been estimated for stocks A and B with the following results: = 0.12 +0.670RM+еA RA= RB=0.04 +1.512RM + еB °M= 0.330 σ(eд) = 0.20 σ(eB) = 0.10 What is the covariance between each stock and the market index? (Round your answers to 4 decimal places.) Stock A covariance Stock B covariance
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