Question: RA = 3% + 0.7RM + eA R-square = 0.20 Firm-specific standard deviation = 28% RB = -2% + 1.2RM + eB R-square = 0.12

RA = 3% + 0.7RM + eA R-square = 0.20 Firm-specific standard deviation = 28%

RB = -2% + 1.2RM + eB R-square = 0.12 Firm-specific standard deviation = 64.99%

M = 20%

What is the correlation coefficient between the two stocks?

Your answer should be in decimal values and accurate to the hundredth (NOT in percentage points).

What is the correlation coefficient between stock B and the market index?

Your answer should be in decimal values and accurate to the hundredth (NOT in percentage points).

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