What was the risk premium on common stock in each year
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What was the risk premium on common stock in each year

1. Assume these are the stock market and Treasury bill returns for a 5-year period:


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 data). Enter your answer as a percent rounded to 2 decimal places.

Hint
Accounts and Finance Risk premium refers to the return in excess of the risk-free rate of return that prior investment is expected to yield. In simple words risk premium is when the demand for a product increases and the supply cannot meet the supply; The variance is the market risk premium. ...

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