Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 2.8% + 1.00RM + eA RB = 1.0% + 1.30RM + eB M = 18%; R-squareA = 0.27; R-squareB = 0.13 Assume you create a portfolio Q, with investment proportions of 0.40 in a risky portfolio P, 0.35 in the market index, and 0.25 in T-bill. Portfolio P is composed of 70% Stock A and 30% Stock B.

1. What is the standard deviation of portfolio Q? (Calculate using numbers in decimal form, not percentages. Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.) Standard deviation: %

2. What is the beta of portfolio Q? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Portfolio beta:

3. What is the "firm-specific" risk of portfolio Q?(Calculate using numbers in decimal form, not percentages. Do not round intermediate calculations. Round your answer to 4 decimal places.) Firm-specific:

4. What is the covariance between the portfolio and the market index? (Calculate using numbers in decimal form, not percentages. Do not round intermediate calculations. Round your answer to 2 decimal places.) Covariance: