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12. Suppose that the index model for the excess returns of stocks A and B is estimated with the following results: Ra = 1.2% +

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12. Suppose that the index model for the excess returns of stocks A and B is estimated with the following results: Ra = 1.2% + 1.1RM + eA Ou-1896, (e.)-2890, (eB)-8% A. Find the standard deviation of each stock and the covariance between them. Suppose we dermiation ofthid psrth B. What will be the nonsystematic siandard form an equally weighted portfolio of A and deviation of that portfolio? Explain parts A and B in a manner that would be easily understood by someone lacking vour quantitative acumen be the B

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