Use the data in the tables below to answer the following questions:
Average rates of return on Treasury bills, government bonds, and common stocks, 1900-2015.
Portfolio Average Annual
Rate of Return (%) Average Premium (Extra return
versus Treasury bills) (%)
Treasury bills 3.8
Treasury bonds 5.3 1.5
Common stocks 11.4 7.6
Standard deviation of returns, 1900-2015.
Portfolio Standard Deviation (%)
Treasury bills 2.9
Long-term government bonds 9.0
Common stocks 19.9
a) What was the average rate of return on large U.S. common stocks from 1900 to 2015?
Average rate of return _______%
b. What was the average risk premium on common stocks?
Average risk premium _________%
c. What was the standard deviation of returns on common stocks?
Standard Deviation of returns _________%
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