The Index Model Has Been Estimated for Stocks a and B

question 71

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 + 1.1R_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) 0.0406.
• C) 0.1920.
• D) 0.0050.
• E) 0.0792.

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Definitions:

Sleep-Rest Patterns

Describes the consistency and quality of an individual's periods of sleep and wakefulness over a 24-hour period.

Sleep-Wakefulness Patterns

The cycle of natural rest and activity periods, including deep sleep, REM sleep, and wakefulness, regulated by the body's internal clock.

Daily Routines

Regular activities or habits that make up an individual's typical day, contributing to structure and predictability in daily life.

Circadian Rhythm

A biological process that displays an endogenous, entrainable oscillation of about 24 hours, affecting physiological and behavioral functions such as sleep-wake cycles.