Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 3.0% + 1.1RM + еA RB =-1.2% +1.2RM + eB = 29%; R-squareA = 0.29; R-squareg = 0.14 What is the covariance between each stock and the market index? (Calculate using numbers in decimal form, not percentage not round your intermediate calculations. Round your answers to 3 decimal places.) Covariance Stock A Stock B
Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 3.0% + 1.1RM + еA RB =-1.2% +1.2RM + eB = 29%; R-squareA = 0.29; R-squareg = 0.14 What is the covariance between each stock and the market index? (Calculate using numbers in decimal form, not percentage not round your intermediate calculations. Round your answers to 3 decimal places.) Covariance Stock A Stock B
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
Problem 1PS
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Nikul
![Suppose that the index model for stocks A and B is estimated from excess returns with the following results:
RA
= 3.0 % +1.1RM + еA
RB
=-1.2% +1.2RM + eB
=
OM = 29%; R-squareд 0.29; R-squareg = 0.14
What is the covariance between each stock and the market index? (Calculate using numbers in decimal form, not percentages. Do
not round your intermediate calculations. Round your answers to 3 decimal places.)
Covariance
Stock A
Stock B](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5350e068-a88f-4364-9c8a-18221f34a30b%2F5d7d2aba-46ea-42b7-8853-37ffe51521f8%2Flnj6m8o_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose that the index model for stocks A and B is estimated from excess returns with the following results:
RA
= 3.0 % +1.1RM + еA
RB
=-1.2% +1.2RM + eB
=
OM = 29%; R-squareд 0.29; R-squareg = 0.14
What is the covariance between each stock and the market index? (Calculate using numbers in decimal form, not percentages. Do
not round your intermediate calculations. Round your answers to 3 decimal places.)
Covariance
Stock A
Stock B
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