Assume these are the stock market and Treasury bill returns for a 5-year period:
Year | Stock Market Return (%) | T-Bill Return (%) | ||||||
2013 | 35.60 | 0.20 | ||||||
2014 | 15.10 | 0.20 | ||||||
2015 | −5.00 | 0.20 | ||||||
2016 | 16.70 | 0.07 | ||||||
2017 | 25.50 | 0.09 | ||||||
Required:
a. What was the risk premium on common stock in each year? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
b. What was the average risk premium?
c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)
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