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Consider the average rates of return for common stocks, government bonds and T-bills for the period 1976-2007 Stocks 13.1% Government Bonds 10.8% Treasury Bills 79%

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Consider the average rates of return for common stocks, government bonds and T-bills for the period 1976-2007 Stocks 13.1% Government Bonds 10.8% Treasury Bills 79% What is the difference between the risk premium on stocks and the maturity premium on government bonds? 3.5 percent 23 percent O 2.9 percent 52 percent Undetermined

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