Question

Assume these are the stock market and Treasury bill returns for a 5-year period:

Year		Stock Market Return (%)			T-Bill Return (%)
2011			−35.83			2.80
2012			30.00			1.30
2013			15.66			0.20
2014			2.08			0.05
2015			17.96			0.07

What was the standard deviation of the risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

26.22 % is WRONG

Answer 1

Year	Market return	-T bill return=	Risk premium
2011	-35.83	2.8	-38.63
2012	30	1.3	28.7
2013	15.66	0.2	15.46
2014	2.08	0.05	2.03
2015	17.96	0.07	17.89

Year	Risk premium
2011	-38.63%
2012	28.70%
2013	15.46%
2014	2.03%
2015	17.89%
Average=	5.09%
Standard dev=	23.45%

Where
Average or Mean = Sum of all observations/Count of all observations
Sample Standard deviation =((∑k=1 to N (observationk – average))/(N))^(1/2)