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

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Question:

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

Year Stock Market Return $(%)$ T $-$ Bill Return $(%)$

$2016 34.60 0.17$

$2017 14.30 0.17$

$2018 - 4.20 0.17$

$2019 15.60 0.04$

$2020 24.70 0.06$

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?

Posted Date: May 11, 2024 05:23 AM

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

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Expert Answer:

To calculate the risk premium on common stock in each year we need to subtract the riskfree rate TBi... View the full answer

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