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Problem 11-6 Risk Premiums

Problem 11-6 Risk Premiums (LO1) Assume these are the stock market and Treasury bill returns for a 5-year period: Year 2013 2014 2015 2016 2017 Stock Market T-Bill Return Return (%) (%) 34.60 @.17 14.30 0.17 -4.20 0.17 15.60 0.04 24.70 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 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 What was the risk premium on common stock in each year? (Do not round intermediate calculations. Enter your ans percent rounded to 2 decimal places.) Risk Premium Year 2013 2014 2015 2016 2017 Required a Required B > 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 average risk premium? (Do not round intermediate calculations. Enter your answer as a percent roun decimal places.) Average risk premium

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