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Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) T-Bill Return (%) 2013 32.10 0.05
Assume these are the stock market and Treasury bill returns for a 5-year period:
Year Stock Market Return (%) T-Bill Return (%)
2013 32.10 0.05
2014 11.30 0.05
2015 2.00 0.05
2016 13.40 0.23
2017 21.70 0.25
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?
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