Question: The index model has been estimated for stocks A and B with the following results: RA = 0.02 + 0.9RM + eA. RB = 0.01

The index model has been estimated for stocks A and B with the following results: RA = 0.02 + 0.9RM + eA. RB = 0.01 + 1.1RM + eB. M = 0.20; (eA) = 0.25; (eB) = 0.10. The covariance between the returns on stocks A and B is A. 0.0396 B. 0.0336 C. 0.0619 D. 0.0099 E. 0.1980

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