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The index model has been estimated for stocks A and B with the following results:...

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The index model has been estimated for stocks A and B with the following results: Return of Stock A: RA= 0.0002 + 1.2RM + ea. Return of Stock B: Rp = 0.00011 + 0.9RM + e. While the standard deviations are given by: SDM = 0.4; SD(ex) = 0.20; SD(es) = 0.10. The covariance between the returns on stocks A and B is Select one O 0.173 0.732 None of the given choices is correct 0 0.041 O 0.432 NO

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