• Suppose that the index model for stocks A and B is estimated from excess returns with the following results:

R_A=3%+1.2 R_M+e_A , RSQ-A=0.4

R_B=3%+1.5 R_M+e_B , RSQ-B=0.25

\(\sigma_M=0.20\\)

• What is the covariance of returns between stocks A and B? Please round your answer to the nearest fourth decimal place.

PLEASE SHOW ALL WORK AND STEPS. I NEED TO UNDERSTAND THIS