Assume these are the stock market and Treasury bill returns for a 5-year period:
Year Stock Market Return (%) T-Bill Return(%)
2011 0.98 0.03
2012 16.06 0.05
2013 33.06 0.07
2014 12.71 0.05
2015 0.67 0.21
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?