The index model has been estimated for stocks A and B with the following results R A 0 12 0 610 R M e A R B 0 04 1 416 R M e B M 0 270 ( e A ) 0 20 ( e B ) 0 10 What is the correlation coefficient between the two stocks (Round your answer to 4 decimal places ) ...

To calculate the correlation coefficient between the two stocks A ...

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

Fantastic news! We've Found the answer you've been seeking!

Question:

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

R_A = 0.12 +0.610R_M + e_A

R_B = 0.04 + 1.416R_M + e_B

σ_M = 0.270

σ(e_A) = 0.20

σ(e_B) = 0.10

What is the correlation coefficient between the two stocks? (Round your answer to 4 decimal places.)

Related Book For answer-question

Understanding Basic Statistics

ISBN: 9781111827021

6th Edition

Authors: Charles Henry Brase, Corrinne Pellillo Brase

See More Books

Posted Date: Feb 24, 2024 03:24 AM

See More Questions

Review the media landscape and system in The Bahamas. Which theories/typologies would fit the nation's media best? Explain your answer thoroughly using "Normative Theories of The Media Journalism and...
Over the past several years, decommissioned U.S. warships have been turned into artificial reefs in the ocean by towing them out to sea and sinking them. The thinking was that sinking the ship would...
1. Draw the bricks and mortar process stages by which hard copy books are created, distributed, and sold in retail stores. How does each player in the value chain make money? (You can use the...
A cubic approximation is commonly used in conjunction with the von Krmn momentum integral. An alternative form is the sine function: \[v_{x}=\alpha \sin (b y)\] What should the constants $\alpha$...
Following is interest rate information currently being observed by the Electronic Publishing Corporation: One-year U.S. government securities .... 4.5% One-year bank loans ............ 6.0% Five-year...
DJT, inc. is considering a new investment opportunity that will require an initial investment of $5,951,000.00. The estimated cash flow for year 1 is $1,000,000, for year 2 is $1,500,000, and...
For this exercise, your client, Bright IDEAS Inc., has provided you with a listing of sales invoices. To test whether the client appears to have a receivables collectability problem, the auditor must...
The following information from St. Paul Supply, Inc. is provided for 2017 and 2016: 12/31/17 12/31/16 12% Cumulative preferred stock, $20 par $200,000 $200,000 Common stock, $5 par 40,000 28,000...
The following technical terms are used. Check that you understand the meaning of each. agency agency theory general purpose financial statements portfolio primary users.
Read the dialogue between David and Leona in Section 1.8. What criticism does David make about annual financial reports? Data from dialogue DAVID: This week I've made three visits to companies,...
Is there any point in time where historical cost and fair value measurement are the same?
Explain how historical cost measurement differs from fair value measurement.
How does the ownership interest in a business increase or decrease after the business has started operating?
A quarter cylinder of length L and radius R is located in the first octant (theregion where x, y, and z are all positive) with its axis along the x-axis. Every-where there exists a non-uniform...
Test your confidence in the following Project Decisions: SI. # Question 01 02 03 04 05 06 07 08 09 10 How many years did it take to construct the largest Egyptian Pyramid- Pyramid of Cheops? When was...
For a binomial probability distribution, it is unusual for the number of successes to be less than 2.5 or greater than + 2.5. (a) For a binomial experiment with 10 trials for which the probability...
Certain kinds of tumors tend to recur. The following data represent the lengths of time, in months, for a tumor to recur after chemotherapy (Reference: D. P. Byar, Journal of Urology, Vol. 10, pp....
Let r be a binomial random variable representing the number of successes out of n trials. (a) Explain why the sample space for r consists of the set {0, 1, 2, . . . , n} and why the sum of the...
Trans Clothing Alterations began operations on 1 August 2024 and completed the following transactions during the first month. 1. Tran deposited $$18$ 000 of her personal funds in a current account...
Finesse Fitness was established on 1 April 2024 with an initial investment of $60000 by the owner, Daniel Hewitt. During the first few months of business, the owner employed a student studying...
Jason Vu offers tutoring services to first-year university students. He has set up a sole proprietorship business named JV Tutoring. Jason has collected the following information relating to his...

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

Question:

Expert Answer:

To calculate the correlation coefficient between the two stocks A ... View the full answer

Understanding Basic Statistics

Students also viewed these finance questions