Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) 2016 2017 2018 2019 2020 35.40 14.80 -4.70 16.20 25.40 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.) Required A Complete this question by entering your answers in the tabs below. Year 2016 2017 2018 2019 2020 Required B Required C T-Bill Return (8) 0.19 0.19 0.19 0.06 0.08 What was the risk premium on common stock in each year? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative values should be entered with a negative sign. Risk Premium % % % % %
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) 2016 2017 2018 2019 2020 35.40 14.80 -4.70 16.20 25.40 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.) Required A Complete this question by entering your answers in the tabs below. Year 2016 2017 2018 2019 2020 Required B Required C T-Bill Return (8) 0.19 0.19 0.19 0.06 0.08 What was the risk premium on common stock in each year? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative values should be entered with a negative sign. Risk Premium % % % % %
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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Finance
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Transcribed Image Text:Problem 11-6 Risk Premiums (LO1)
Assume these are the stock market and Treasury bill returns for a 5-year period:
Year
2016
2017
2018
2019
2020
Stock Market Return (%)
35.40
14.80
-4.70
16.20
25.40
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
Year
2016
2017
2018
2019
2020
T-Bill Return
(%)
0.19
0.19
0.19
0.06
0.08
What was the risk premium on common stock in each year?
Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative values
should be entered with a negative sign.
Risk Premium
%
%
%
%
%
Dequired R
CH
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