. Use the following historical average returns and standard deviations to answer the

question below.

Asset	Average	Return Standard Deviation
Canadian common stocks	13.20%	16.62%
US common stocks	15.59%	16.86%
Long bonds	7.64%	10.57%
Small-company stocks	14.79%	23.68%
Treasury bills	6.04%	4.04%

Based on the historical data above, what is your reward for bearing risk of owning small-

company stocks rather than Canadian common stocks?

1. 1.59%
2. 0.80%
3. 2.39%
4. 1.60%
5. 4.25%