Assume these are the stock market and Treasury bill returns for a 5-year period: Stock Market T-Bill Year Return (8) Return (8) 0.09 2013 2014 2015 32.80 12.20 0.09 -2.90 0.09 2016 14.00 0.04 0.06 2017 23.00 Required: a. What was the risk premium on common stock in each year? b. What was the average risk premium? c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)
Assume these are the stock market and Treasury bill returns for a 5-year period: Stock Market T-Bill Year Return (8) Return (8) 0.09 2013 2014 2015 32.80 12.20 0.09 -2.90 0.09 2016 14.00 0.04 0.06 2017 23.00 Required: a. What was the risk premium on common stock in each year? b. What was the average risk premium? c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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what was the risk premium on common stock each year
2013
2014
2015
2016
2017
what was the average risk premium?
what was the standard deviation of the risk premium?
Transcribed Image Text:Assume these are the stock market and Treasury bill returns for a 5-year period:
Year
2013
2014
2015
2016
2017
Stock Market
Return (t)
32.80
12.20
-2.90
14.00
T-Bill
Return (8)
0.09
0.09
0.09
0.04
23.00
0.06
Required:
a. What was the risk premium on common stock in each year?
b. What was the average risk premium?
c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)
Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C
What was the risk premium on common stock in each year? (Do not round intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places.)
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