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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 (%) 2016 35.40 0.19
Assume these are the stock market and Treasury bill returns for a 5-year period:
| Year | Stock Market Return (%) | T-Bill Return (%) |
|---|---|---|
| 2016 | 35.40 | 0.19 |
| 2017 | 14.80 | 0.19 |
| 2018 | 4.70 | 0.19 |
| 2019 | 16.20 | 0.06 |
| 2020 | 25.40 | 0.08 |
Required:
- What was the risk premium on common stock in each year?
- What was the average risk premium?
- What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)
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Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
7th Edition
007331465X, 978-0073314655
