1.76points

ItemSkipped

Item 2

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

Year		Stock Market Return (%)			T-Bill Return (%)
2013			35.90			0.21
2014			15.20			0.21
2015			5.10			0.21
2016			16.90			0.08
2017			25.90			0.10

Required:

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? (Ignore that the estimation is from a sample of data.)