question archive The index model has been estimated for stocks A and B with the following results: RA= 0
The index model has been estimated for stocks A and B with the following results: RA= 0
Subject:FinancePrice:2.86 Bought3
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
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
COVARIANCE = beta of stock A x beta of stock B x variance of market
COVARIANCE = 0.7 x 0.9 x (0.35)2
= 0.077175
=0.0772
Answer : 0.0772
