Question
Consider the following rates of return: Year Large-Company Stocks US Treasury Bill 1 3.92 % 5.90 % 2 14.18 2.53 3 19.37 3.76 4 14.31
Consider the following rates of return: |
Year | Large-Company Stocks | US Treasury Bill | ||||
1 | 3.92 | % | 5.90 | % | ||
2 | 14.18 | 2.53 | ||||
3 | 19.37 | 3.76 | ||||
4 | 14.31 | 7.16 | ||||
5 | 31.80 | 5.42 | ||||
6 | 37.08 | 6.24 | ||||
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.) |
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