Assume these are the stock market and Treasury bill returns for a 5-year period: Stock Market Return () 31.7 T-Bill Return () Year 2013 2014 2015 2016 0.02 10.9 -1.6 13.0 21.3 0.02 0.02 0.20 0.80 2017 Required: a. What was the risk premium on common stock in each year? (Negative values should be entered with a negative sign.) 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 Return () 31.7 T-Bill Return () Year 2013 2014 2015 2016 0.02 10.9 -1.6 13.0 21.3 0.02 0.02 0.20 0.80 2017 Required: a. What was the risk premium on common stock in each year? (Negative values should be entered with a negative sign.) 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.)
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 17P
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Transcribed Image Text:Assume these are the stock market and Treasury bill returns for a 5-year period:
Year
2013
Stock Market
Return ()
31.7
T-Bill
Return ()
0.02
0.02
2014
2015
2016
10.9
-1.6
13.0
21.3
0.02
0.20
0.80
2017
Required:
a. What was the risk premium on common stock in each year? (Negative values should be entered with a negative
sign.)
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.)
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What was the average risk premium? (Do not round intermediate calculations. Enter vour answer as a percent rounded to 2
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What was the average risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2
decimal places.)
nces
Average risk premium
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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 round
intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Standard deviation
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