Problem $8-12$

Suppose that the index model for stocks A and $B$ is estimated from excess returns with the following results:

$R_A=3\mathrm{.}4\%+1\mathrm{.}1R_M+e_A$

$R_B=-1\mathrm{.}5\%+1\mathrm{.}3R_M+e_B$

${}_M=15\%$;$R-$square $e_A=0\mathrm{.}26$;$R-$square $e_B=0\mathrm{.}16$

What is the covariance between each stock and the market index? $($Calculate using numbers in decimal form, not percentoges. Do not round your intermediate calculations. Round your answers to $3$ decimal places.$)$

$\backslash$table$[[,$Covariance$],[$Stock A$,],[$Stock B$,]]$