Question
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return T-Bill Return Year 1 -37.13 1.70 Year
| Assume these are the stock market and Treasury bill returns for a 5-year period: |
|
|
| Year |
| Stock Market Return |
| T-Bill Return |
| |||
| Year 1 |
|
| -37.13 |
|
| 1.70 |
|
|
| Year 2 |
|
| 28.40 |
|
| .20 |
|
|
| Year 3 |
|
| 17.06 |
|
| .13 |
|
|
| Year 4 |
|
| 1.08 |
|
| .05 |
|
|
| Year 5 |
|
| 16.16 |
|
| .07 |
|
|
| a. | What was the risk premium on common stock in each year? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) |
| Year | Risk premium |
| Year 1 | % |
| Year 2 | % |
| Year 3 | % |
| Year 4 | % |
| Year 5 | % |
| b. | What was the average risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) |
| Average risk premium | % |
| c. | What was the standard deviation of the risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) |
| Standard deviation | % |
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Essentials Of Corporate Financial Management
Authors: Glen Arnold
1st Edition
1405847042, 978-1405847049
