To obtain T"'13, the average industry return and average corporate return associated with each business-unit are multiplied together and the products summed over all business-units; the measure is designed to be independent of the first seven sum-squares and to highlight any covariance between industry and corporate effects.
Expressions for the expected values of the quadratic forms are obtained by substituting (2) into (Al)-(A8) and taking expectations. In taking these expectations, the stochastic assumptions of
(3)are operationalized as follows: