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Consider the following rates of return for the period from 1970 through 1975 (taken from Table 12.1 in your textbook): Year Large-Company Stocks U.S. Treasury Bills 1970 1971 1972 1973 1974 1975 3.94% 14.30 18.99 -14.69 26.47 37.23 6.50% 4.36 4.23 7.29 7.99 5.87 What was the average risk premium over this period for large-company stocks? (Negative amount should be indicated by a minus sign. Enter your answer as a percentage, omit the % sign in your response, and round your answer to 2 decimal places. For example, 0.12345 or 12.345% should be entered as 12.35)

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Answer #1
Year LCS US TB Risk premium
1970 3.94% 6.50% -2.56%
1971 14.30% 4.36% 9.94%
1972 18.99% 4.23% 14.76%
1973 -14.69% 7.29% -21.98%
1974 -26.47% 7.99% -34.46%
1975 37.23% 5.87% 31.36%
Average risk premium -0.49%
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