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Question 7 (7 points) Suppose you have been presented with some historical data on the average annual returns on common stock, corporate bonds, and U.S.

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Question 7 (7 points) Suppose you have been presented with some historical data on the average annual returns on common stock, corporate bonds, and U.S. Treasury bonds over the last 100 years. During that 50-year period the return on common stock averaged 16.5% per year, the return on corporate bonds was 11%, and the return on U.S. Treasury bonds was 8.75% per year. Based on these historical annual returns what was the average annual risk premium on common stock over corporate bonds? Also, what was the risk premium on corporate bonds over U.S. Treasury bonds over this 100-year period? Risk Premium on Common Stock over Corporate Bonds - Risk Premium on Corporate Bonds over Treasury Bonds =

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