The average risk premium on large-company stocks for the period 1926-2012 was:
A)6.7 percent.
B)8.0 percent.
C)8.5 percent.
D)12.3 percent.
E)13.6 percent.

Question

Quizplus · Accepted Answer

The average risk premium on large-company stocks for the period 1926-2012 was calculated to be 8.0 percent, according to the historical data provided by Ibbotson and Sinquefield. This means that investors could expect to earn an average return of 8.0 percent above the risk-free rate by investing in large-company stocks over the long-term.

The Average Risk Premium on Large-Company Stocks for the Period