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. Suppose the index model for stocks A and B is estimated from excess returns with the following results: RA = 3% + 0.7RM +

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. Suppose the index model for stocks A and B is estimated from excess returns with the following results: RA = 3% + 0.7RM + en Rp = -2% + 1.2RM + eb Om = 20%; RSquared A = 0.20; RSquaredp = 0.12 i. What is the standard deviation of each stock? [4 marks]

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