Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the following rates of return: Year Large - Company Stocks US Treasury Bills 1 3 . 9 0 % 5 . 8 4 %

Consider the following rates of return:
Year Large-Company Stocks US Treasury Bills
13.90%5.84%
214.472.49
319.213.72
414.477.14
531.965.26
637.456.39
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.)
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.)
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.)
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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials of Marketing Research

Authors: Joseph Hair, Mary Wolfinbarger, Robert Bush, David Ortinau

2nd edition

73404829, 978-0073404820

Students also viewed these Finance questions

Question

What is one of the skills required for independent learning?Explain

Answered: 1 week ago