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The following information is from Table 10.2 in the textbook and is used in the subsequent two questions. The arithmetic average and standard deviations (respectively)
The following information is from Table 10.2 in the textbook and is used in the subsequent two questions. The arithmetic average and standard deviations (respectively) of historical returns on four broad indexes and the realized inflation rate (from 1926-2020) were as follows: Small-company stocks 16.2% 31.3% Large-company stocks 12.2% 19.7% Long-term gov't. bonds 6.1% 9.8% US. T-bills 3.3% 3.1% Inflation 2.9% 4.0% What is the average risk premium earned on large-company stocks? O A. 9.3% B. 15.7% O C. 8.9% D. 12.9%
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