9.11 The following are the returns during the past seven years on a market portfolio of common...

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9.11 The following are the returns during the past seven years on a market portfolio of common stocks and on Treasury bills.

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The realized risk premium is the return on the common stocks less the return on the Treasury bills.

a. Calculate the realized risk premium of common stocks over T-bills in each year.

b. Calculate the average risk premium of common stocks over T-bills during the period.

c. Is it possible that this observed risk premium can be negative? Explain.

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Corporate Finance

ISBN: 9780071229036

6th International Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

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Question Posted: Jul 25, 2024 10:03 AM

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9.11 The following are the returns during the past seven years on a market portfolio of common...

Question:

Common Treasury Year Stocks Bills -7 32.4% 11.2% -6 -4.9 14.7 -5 21.4 10.5 -4 22.5 8.8 -3 6.3 9.9 -2 32.2 7.7 Last 18.5 6.2

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Corporate Finance

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