The total annual returns on large company common stocks averaged 11.8% from 1926 to 2012,small company stocks averaged 16.5%,long-term government bonds averaged 6.1%,while Treasury Bills averaged 3.6%.What was the average risk premium earned by long-term government bonds,and small company stocks respectively?
A)1.8%;13.3%
B)2.5%;12.9%
C)4.4%;11.9%
D)9.5%;1.8%
E)None of the above

Question

Quizplus · Accepted Answer

Long Term Government = 6.1% - 3.6% = 2.5%Small Stocks = 16.5% - 3.6% = 12.9%

The Total Annual Returns on Large Company Common Stocks Averaged