What is best estimate of the r-squared in the regression

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

RA= 0.03 + 0.85RM+ eA RB= 0.01 + 1.55RM+ eB The standard deviation of the market index is 27%; the residual standard deviation of the error terms for stock A is 22%; the residual standard deviation of the error terms for stock B is 30%.

1. What is your best estimate of the total variance of the excess returns on stock B? Enter your answer rounded to two decimal places.

2. What is your best estimate of the R-Squared in the regression of stock A on the market index M? Enter your answer as a decimal rounded to four decimal places.

Reference no: EM131926737

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