Question: Use the data in the tables below to answer the following questions: Average rates of return on Treasury bills, government bonds, and common stocks, 19002020.

Use the data in the tables below to answer the following questions:

Average rates of return on Treasury bills, government bonds, and common stocks, 19002020.

Portfolio Average Annual Rate of Return (%) Average Premium (Extra return versus Treasury bills) (%)
Treasury bills 3.7
Treasury bonds 5.4 1.7
Common stocks 11.5 7.8

Standard deviation of returns, 19002020.

Portfolio Standard Deviation (%)
Treasury bills 2.8
Long-term government bonds 8.9
Common stocks 19.5
  1. What was the average rate of return on large U.S. common stocks from 1900 to 2020?
  2. What was the average risk premium on large stocks?
  3. What was the standard deviation of returns on common stocks?

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