The index model for the excess returns of stock A and B is estimated by the following equations: RA= 3%+1.1RM+eA RB= 3%+1.1RM+eA M = 30% eA= 15%; eB = 12%

Calculate the systematic risk, firm specific risk and total risk of stock A and B.

Calculate the covariance between stock A and B.

Calculate the covariance between stock A and the index.