1)

The index model has been estimated for stocks A and B with the following results

RA = 0.04 + 0.25RM + eA. RB = 0.02 + 0.95RM + eB. M = 0.39; (eA) = 0.23; (eB) = 0.04. The covariance between the returns on stocks A and B is

Round your answer to 4 decimal places. For example if your answer is 3.205%, then please write down 0.0321.

2)

The index model has been estimated for stock A with the following results. What is the standard deviation of stock A's total return?

RA = 0.04 + 1.5*RM+eA.

Assume M= 0.24; eA= 0.31.

Round your answer to 4 decimal places.