Jefferson Mills stock produced returns of 14.8,22.6,5.9,and 9.7 percent,respectively,over the past four years.During those same years,U.S.Treasury bills returned 3.8,4.6,4.8,and 4.0 percent,respectively,for the same time period.What is the variance of the risk premiums on Jefferson Mills stock for these four years?
A) 0.00298
B) 0.00196
C) 0.00396
D) 0.00478
E) 0.00528

Question

Quizplus · Accepted Answer

Annual risk premiums are 11.0, 18.0, 1.1, and 5.7 percent, respectively. Mean = (0.11 + 0.18 + 0.011 + 0.057) / 4 = 0.0895 Var = [(0.11 - 0.0895)² + (0.18 - 0.0895)² + (0.011 - 0.0895)² + (0.057 - 0.0895)²] / (4 - 1) = 0.00528

Jefferson Mills Stock Produced Returns of 14