PLEASE SHOW ALL WORK AND EXPLAIN FORMULAS USED

Question 1:

The following are estimates for stock A.

Expected Return= 10%

Beta= 0.9

Firm-Specific Standard Deviation= 15%

The market index M has a standard deviation of 29% and the risk-free rate is 5%. Compute the R-square of the regression for stock A. Express your answer as a decimal number with 3 decimal places.

Question 2:

The following are estimates for Stock A.

Expected Return= 17%

Beta= 1.3

Firm Specific Standard Deviaion= 19%

The MArket index M has an expected return of 20% and a standard deviation of 28%. The risk free rate is 5%. Compute the ALPHA of the regression of stock A. Express your answer as a percent with two decimal places.