By regressing monthly stock returns of Starbucks (NASDAQ: SBUX) on monthly returns of the S&P 500 index for the past five years, you obtained an estimated beta of 0.92. In addition, the current yield to maturity (YTM) for the 3-month T-Bill is 0.10%, 10-year T-Note is 0.66%, and 30-year T-Bond is 1.40%. 1. Based on the following table on historical returns on various asset classes, what is your estimate of the expected market risk premium (that is, E[rm rf]) in the CAPM formula)? Hint: arithmetic means tend to provide better estimates of future expected returns Asset class Large Company Stocks (i.e., S&P 500) Small Company Stocks Long-term Corporate Bonds Long-term (30-year) Treasury Bonds Intermediate-term (10-year) Treasury Bonds U.S. Treasury Bills (3-month) Geometric Mean (%) 9.8 11.9 6.1 5.7 5.4 3.6 Arithmetic Mean (%) 11.8 16.5 6.4 6.1 5.5 3.6 Standard Deviation (%) 20.3 32.5 8.4 9.8 5.7 3.1