Question: Suppose that the index model for stocks A and B is estimated from excess returns with the following results: R A = 2.0% + 0.40

Suppose that the index model for stocks A and B is estimated from excess returns with the following results: R_A = 2.0% + 0.40R_M + e_A R_B = 1.8% + 0.90R_M + e_B _M = 15%; R-square_A = 0.30; R-square_B = 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.)

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