The index model has been estimated for stocks A and B with the following results:

RA= 0.01 + 0.5RM+ eA

RB= 0.02 + 1.3RM+ eB

M= 0.25 (eA) = 0.20 (eB) = 0.10

The covariance between the returns on stocks A and B is

a. 0.0406

b. 0.4000

c. 0.0050

d. 0.0384

e. 0.1920