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

Year		Stock Market Return (%)			T-Bill Return (%)
2013			31.7			0.02
2014			10.9			0.02
2015			-1.6			0.02
2016			13.0			0.20
2017			21.3			0.80

Required:

a. What was the risk premium on common stock in each year? (Negative values should be entered with a negative sign.)

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.)

Here are the returns on two stocks. January February March April May June July August Digital Cheese +14 -3 +5 +7 -4 +3 -2 -8 Executive Fruit +7 +1 +4 +13 +2 +5 -3 -2 Required: a-1. Calculate the variance and standard deviation of each stock. a-2. Which stock is riskier if held on its own? b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks. c. Is the variance more or less than halfway between the variance of the two individual stocks