Question: Returns on the stock market and Treasury bills are listed in the table below for a 5-year period. An investor is deciding whether or not to make an investment in a stock. Given the data presented and a forecasted Treasury bill return 1.90%, what is the expected return on the stock investment?

Returns %

Year Treasury bills Stock market index

1 0.92% 10.50%

2 0.77% 9.60%

3 1.05% 10.93%

4 0.97% 10.06%

5 1.20% 10.87%