Question: Current answers are incorrect Assume that security returns are generated by the single-index model, Ri=i+iRM+ei where Ri is the excess return for security i and

Current answers are incorrect Assume that security returns are generated by theCurrent answers are incorrect

Assume that security returns are generated by the single-index model, Ri=i+iRM+ei where Ri is the excess return for security i and RM is the market's excess return. The risk-free rate is 2%. Suppose also that there are three securities A,B, and C, characterized by the following data: a. If M=10%, calculate the variance of returns of securities A,B, and C

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