Question
The index model has been estimated for stocks A and B with the following results: RA= 0.03 + 0.7RM+ eA, RB= 0.01 + 0.9RM+ eB,
The index model has been estimated for stocks A and B with the following results: RA= 0.03 + 0.7RM+ eA, RB= 0.01 + 0.9RM+ eB, Risk of the market= 0.35 Risk of stock A = 0.20, Risk of stock B = 0.10. The covariance between the returns on stocks A and B is _________. Select one: a. 0.0406 b. 0.0772 c. 0.0384 d. 0.1920
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Fundamentals Of Corporate Finance
Authors: Stephen A Ross, Randolph W Westerfield, Bradford D Jordan
7th Edition
0073134295, 9780073134291
