Chapter 11 Risk & Return Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) T-Bill Return (%) Risk Premium 2016 34.5 2017 14.2 2018 -4.10 2019 15.3 2020 24.6 0.16 0.16 0.16 0.03 0.05 47. What was the risk premium on common stock in each year? (you may write it in the column above) 48. What was the average risk premium? 49. Calculate the standard deviation of the risk premium? 50. Over the past 3 years an investment returned 18.75%, -12.75%, and 15.75%. What is the variance of returns? 51. Over the past 4 years an investment returned 19.3%, -10.3%, -13.3%, and 16.3%. What is the standard deviation of returns? 52. Calculate the variance of returns for Alpha stock with the following historical rates of return: 2018: 20.33%, 2019: 25.22%, 2020: 30.22% 53. What is the standard deviation of returns of a portfolio that produced returns of 20.9%, 25.9%, and 30.9%? 54. What is the expected return on a portfolio that will decline in value by 13.33% in a recession, will increase by 16.33% in normal times, and will increase by 23.33% during boom times? Each scenario has an equal likelihood of occurrence. 55. What is the return to an investor who purchases a stock for $33.50, receives a $2.90 dividend at the end of the year, and then sells the share for $30.60? 56. What is the return to an investor who purchases a stock for $33.50, receives a $2.90 dividend at the end of the year, and then sells the share for $30.60?