Question: Problem 8-10 Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 2.0% +

Problem 8-10 Suppose that the index model for stocks A and

Problem 8-10 Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 2.0% + 0.40 RM + eA RB = -1.8% + 0.9 RM + eB OM = 15%; R-square A = 0.30; R-squares = 0.22 Break down the variance of each stock to the systematic and firm-specific components. (Do not round intermediate calculations. Calculate using numbers in decimal form, not percentages. Round your answers to 4 decimal places.) Risk for A Risk for B Systematic Firm-specific

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