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Suppose that the index model for stocks A and B is estimated from excess returns with the following results: R A = 2.0% + 0.40

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

R_A = 2.0% + 0.40R_M + e_A

R_B = -1.8% + 0.90R_M + e_B

_M = 15%; R-square_A = 0.30; R-square_B = 0.22

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.)

Stock A =

Stock B =

The answer to stock B is not .2570 !!!

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