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The total annual returns on large company common stocks averaged 12.4% from 1926 to 2005 small company stocks averaged 17.5%, long-term government bonds averaged 5.8%,

The total annual returns on large company common stocks averaged 12.4% from 1926 to 2005 small company stocks averaged 17.5%, long-term government bonds averaged 5.8%, while Treasury Bills averaged 3.8%. What was the average risk premium earned by long-term government bonds, and small company stocks respectively?

a.

2.0%; 13.7%

b.

1.8%; 13.3%

c.

4.4%; 11.9%

d.

None of the above.

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