Here are annual stock market, Government of Canada bond, and Treasury bill rates of return from 20 10 to 20 14:
a. What were the risk premiums on the TSX and on long·tern1 government bonds in each year?
b. What were the average risk premiums for the TSX and long-term government bonds?
c. Calculate the standard deviation of each risk premium using the approach in Table 11.4. Do they make sense?