You’ve observed the following returns on SkyNet Data Corporation’s stock over the past five years: 21 percent, 17 percent, 26 percent, 27 percent, and 4 percent.
a. What was the arithmetic average return on the company’s stock over this five - year period?
b. What was the variance of the company’s returns over this period? The standard deviation?
c. What was the average nominal risk premium on the company’s stock if the average T - bill rate over the period was 5.1 percent?
Please show your work