For the period 1926-2012 small-company stocks had an average return of 16.5 percent.U.S.Treasury bills returned 3.6 percent and inflation averaged 3.1 percent.Small-company stocks had an approximate real rate of return of _____ percent and a risk premium of _____ percent.
A)12.9;13.4
B)12.9;9.8
C)13.4;12.9
D)13.4;9.8
E)9.8;12.9

Question

Quizplus · Accepted Answer

Real return = 16.5% - 3.1% = 13.4%Risk premium = 16.5% - 3.6% = 12.9%

For the Period 1926-2012 Small-Company Stocks Had an Average Return