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Consider the following rates of return: US Large- Year Company Stocks 1 3.66 % 14.44 3 19.03 -14.65 -32.14 6 37.27 Treasury Bills 4.66 %

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Consider the following rates of return: US Large- Year Company Stocks 1 3.66 % 14.44 3 19.03 -14.65 -32.14 6 37.27 Treasury Bills 4.66 % 2.33 4.12 5.88 4.90 6.33 5 a. Calculate the arithmetic average returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Average returns Large-company stocks T-bills b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation Large-company stocks T-bills C-1. Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the arithmetic average risk premium over this period? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average risk premium C-2. Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the standard deviation of the risk premium over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation

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