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

Year Stock Market Return (%)T-Bill Return

2013 33.70% 0.13

2014 13.30% 0.13

2015 -3.60% 0.13

2016 14.70 0.08

2017 24.20 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.)