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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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