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Stock and the market index

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Suppose that the index model for stocks A and B is estimated from excess returns with the following results:

RA = 2.5% + 0.95RM + eA

RB = -1.8% + 1.10RM + eB

σM = 27%; R-squareA = 0.23; R-squareB = 0.11

What is the covariance between each stock and the market index?

Reference no: EM132481287

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