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P3. Recalling the definitions of risk premiums in Chapter 8 and using the Treasury bill return in Table 12.4 as an approximation to the nominal

P3. Recalling the definitions of risk premiums in Chapter 8 and using the Treasury bill return in Table 12.4 as an approximation to the nominal risk-free rate, what is the risk premium from investing in each of the other asset classes listed in Table 12.4? P4. What is the real, or after-inflation, return from each of the asset classes listed in table 12.4? Treasury Bill Treasury Bond Stocks Inflation Rate Annual Ave Return 3.8% 5.4% 11.1% 3.2% Standard Deviation 3.0% 7.6% 20.4% 4.0%

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