Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 3.0% +1.05RM + CA RB =-1.2% +1.20RM + CB OM = 29%; R-squareA = 0.29; R-squareB = 0.14 What is the covariance between each stock and the market index? Note: Do not round intermediate calculations. Calculate using numbers NOT in decimal form. For example use "20" for calculation if standard deviation is provided as 20%. Round your answers to nearest whole number. Stock A Stock B Covariance

Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 3.0% +1.05RM + CA RB =-1.2% +1.20RM + CB OM = 29%; R-squareA = 0.29; R-squareB = 0.14 What is the covariance between each stock and the market index? Note: Do not round intermediate calculations. Calculate using numbers NOT in decimal form. For example use "20" for calculation if standard deviation is provided as 20%. Round your answers to nearest whole number. Stock A Stock B Covariance

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 6P: The market and Stock J have the following probability distributions: a. Calculate the expected rates...

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