Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 3% + 0.7RM + eA RB = 2% + 1.2RM + eB M = 20%; A = 31.30%; B = 69.28%; R-squareA = 0.20; R-squareB = 0.12 What are the covariance and the correlation coefficient between the two stocks? 2