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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Question
I need help with C

Transcribed Image Text:Assume these are the stock market and Treasury bill returns for a 5-year period:
Stock Market
Return (3)
T-Bill
Year
Return ()
2013
32.40
0.06
2014
11.70
0.06
2015
-2.30
0.06
2016
13.60
0.24
2017
22.10
0.26
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 standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) (Do not
intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Standard deviation
%6
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