Question: 2. (5 points) Assume we have the below model for excess returns. rit = BiMktz + Eity where fint is the idiosyncratic shock for every

2. (5 points) Assume we have the below model for excess

2. (5 points) Assume we have the below model for excess returns. rit = BiMktz + Eity where fint is the idiosyncratic shock for every asset i. If B1 = 0.9, B2 = 1.1, Var(Mktt) = 0.2 and Var(Mktt) = 0.1 for all asset i, what is the unconditional covariance between rit and r2.t

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