T12.20 Chapter 12 Quick Quiz (concluded)
The risk premium is the difference between a risky investment’s return and a riskless return. Based on historical data:
Investment Average Standard Risk return deviation premium
Common 12.7% 20.3% ____% stocks
Small 17.7% 34.1% ____% stocks
LT Corporates 6.0% 8.7% ____%
Long-term 5.4% 9.2% ____% Treasury bonds
Treasury bills 3.8% 3.3% ____%