Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 1.6% +

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answerhappygod
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Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 1.6% +

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Suppose that the index model for stocks A and B is estimatedfrom excess returns with the following results: RA = 1.6% + 0.70RM+ eA RB = –1.8% + 0.90RM + eB σM = 22%; R-squareA = 0.20; R-squareB= 0.15 Break down the variance of each stock to the systematic andfirm-specific components. (Do not round intermediate calculations.Calculate using numbers in decimal form, not percentages. Roundyour answers to 4 decimal places.)
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