Risk P r emiums.

Risk P r emiums.

Here are stock market and Treasury bill returns between 1994 and 1998:

Y ear S&P Retu r n T -Bill Retu r n

1994	1.31	3.90
1995	37.43	5.60
1996	23.07	5.21
1997	33.36	5.26
1998	28.58	4.86

a. What was the risk premium on the S&P 500 in each year?

b. What was the average risk premium?

c. What was the standard deviation of the risk premium?

 

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