The Index Model Has Been Estimated for Stocks a and B

question 56

Multiple Choice

The index model has been estimated for stocks A and B with the following results:R_A = 0.01 + 0.8R_M + e_A. R_B = 0.02 + 1.2R_M + e_B.
Σ_M = 0.30; σ(e_A) = 0.20; σ(e_B) = 0.10.The covariance between the returns on stocks A and B is

• A) 0.0384.
• B) 0.086.
• C) 0.1920.
• D) 0.0050.
• E) 0.4000.

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Definitions:

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Engagements or tasks that induce positive emotions, enhance well-being, and contribute to personal or group fulfillment, often used in therapeutic contexts to improve mental health.

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Drugs used to alleviate symptoms of depression by regulating brain chemicals that affect mood and emotions.

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An operant conditioning treatment program that offers clients incentives (such as vouchers, prizes, cash, or privileges) that are contingent on the submission of drug-free urine specimens.

Reinforcement

In psychology, a process by which a behavior is strengthened or increased, often through rewards or consequences.