Question: a) What is the arithmetic average return for the stock? What is the arithmetic average return for the risk-free asset? b) What is the risk

a) What is the arithmetic average return for the stock? What is the arithmetic average return for the risk-free asset?

b) What is the risk premium of this stock?

Year

Stock Price

Stock Dividend

Risk-free rate

0

$17

-

-

1

$19

$0.69

2.25%

2

$22

$0.80

2.40%

3

$25

$0.88

1.75%

4

$28

$0.92

1.95%

5

$33

$1.30

2.70%


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