The first riddle goes like: " Who is that shrill one, who rides a hard road, has fared that way before. He kisses hard who has two mouths and goes only on gold"
The first answer is: Hammer
He will give you "Elf's Langseax" which is a one handed knife which cannot be used to block. It weighs 1.0, deals 34c in swing damage, deals 18p in thrust damage, has a speed of 94, a reach of 76 and requires 4 strength to use.

The second riddle goes like: "What is that wonder I saw in my ruins, Eight feet it has and four eyes and bears knees above its belly."
The second answer is: Spider
Even though it is the correct answer he takes 5000 peningas regardless.

The third riddle goes like: "Four hang, four sprang, two point the way, two to ward off dogs, one dangles after, always rather dirty."
The third answer is: Cow
He will give you "Elf's Shield" which has 380 in durability/health, 4.0 in weight, 20 resistance, 70 in size and 90 in speed.

The fourth and final riddle goes like: "What creature is that, which cradles men, it bears a bloody back, and shelter from fighters, from shaft and point, gives life to some, and lays its self inside a soldiers grasp?"
The fourth answer is: Shield
He will give you "Elf's Helm" which has +53 to head armor, requires 5 strength and has a weight of 2.0.It can be upgraded to "Lordly", which will give you +59 to head armor which makes it the best helmet in the game.
Apparently the devs have removed the option to upgrade the Elf's Helm to Lordly, so the highest upgrade you can get now is Reinforced, which gives you +57 head armor instead of +59, so 3 points less than Lordly but still the best helmet in the game. (Thanks to Ragnarr Loðbrók and MayorOfBrownTown for notifying me about this change).

*Made 13th December 2014.
**Updated 9th August 2015.
***Updated again 11th December 2016.
****Updated 24th July 2017. Each riddle now has its own respective section.