Question: Problem 8-12 Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 2.0% +

Problem 8-12 Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 2.0% + 0.40RM + eA RB = -1.8% + 0.90RM + eB OM = 15%; R-squarea = 0.30; R- squares = 0.22 What is the covariance between each stock and the market index? (Calculate using numbers in decimal form, not percentages. Do not round your intermediate calculations. Round your answers to 3 decimal places.) Covariance Stock A Stock B

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