Suppose that the index model for stocks A andB is estimated from excess returns with the followingresults:RA = 3.0% + 1.05RM +eARB = ??1.2% +

Suppose that the index model for stocks A andB is estimated from excess returns with the followingresults:RA = 3.0% + 1.05RM +eARB = â??1.2% + 1.20RM +eB?M = 29%;R-squareA = 0.29;R-squareB 2 answers