Assume that over the last several decades, the annual returns on large-company commonstocks averaged 12.1 percent, small-company stocks averaged 16.5 percent, long-termgovernment bonds averaged 6 percent, and U.S. T-bills averaged 3.4 percent. What was theaverage excess return or risk premium earned by long-term government bonds, and small-company stocks respectively?O2.6%: 13.1%2.6%; 4.4 %1.8%; 13.3%1.9%; 5.1%

Excess return earned by long-term government bonds = (long-term government bonds -U.S. T-bills)…

Answered: Assume that over the last several…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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