Here are stock market and Treasury bill returns between 1997
and 2001:
Year Stock Market Return T-Bill Return
1997 31.29 5.26
1998 23.43 4.86
1999 23.56 4.68
2000 -10.89 5.89
2001 -10.97 3.83
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?
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