Here are rates of return on a broad stock market index and on Treasury bills between 2011

Question:

Here are rates of return on a broad stock market index and on Treasury bills between 2011 and 2015

Year___________Stock Market Return (%)____________T-Bill Return (%)

2011..........................................0.98.................................................0.03

2012........................................16.06.................................................0.05

2013........................................33.06.................................................0.07

2014........................................12.71.................................................0.05

2015..........................................0.67.................................................0.21

a. What was the risk premium on common stock in each year?

b. What was the average risk premium?

c. What was the standard deviation of the risk premium?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...