The following are asset classes and their average returns: Large Cap Stocks, 12

Finance Dec 26, 2020

The following are asset classes and their average returns: Large Cap Stocks, 12.3%; Small Cap Stocks, 16.0%; Long-term Corporate Bonds, 9.6%; Collectibles, 13.9%; Commodities, 14.4%; Real Estate, 10.1%; Treasury Bills, 4.0%; Inflation, 2.4%. What is the risk premium for Long-term Corporate Bonds?

Expert Solution

risk premium for Long-term Corporate Bonds = Long-term Corporate Bonds return-Treasury Bills return

=9.6-4

=5.6%

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