Which one will be selected and the reason plz.

Question 1 2 pts 2. 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 standard deviationmarket= 0.35 standard errorA = 0.20standard errors = 0.10 The covariance between the returns on stocks A and B is O 0.0772 O 0.0384 O 0.0406 O 0.1920 O 0.4000