The earnings of a U.S. company with national operations increaseone-factor return specification in Eq (1) and a return description of momentum trading. Equation (1): rit = Mi+b;Ft + Eit Equation (2): E[(rit – 77)(rit-1 – Tt-1)] a) Use Eq 1 and 2 to derive Eq (3) in JT (1993). Provide detailed steps and explanations. b) In Equation (3), what is the conceptual difference between of Cov(Ft, Ft-1) and Cov(Eit, Eit-1)? c) If either oſ = 0 or Cov(Ft, Ft-1) = 0 , then of Cov(Ft, Ft-1) drops out. - Conceptually, why does Cov(Ft, Ft-1) =0 reduce momentum profit? Even if Cov(Ft, Ft-1) > 0, why does ob=0 reduce momentum profit? d) What are two scenarios that can lead to Cov(Eit, &it-1)=0. Conceptually explain why each of the two scenarios make momentum trading unprofitable.