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Consider the following rates of return: Year Large-Company Stocks US Treasury Bills 1 3.99 % 4.59 % 2 14.16 4.94 3 19.25 3.86 4 14.43
Consider the following rates of return: Year Large-Company Stocks US Treasury Bills 1 3.99 % 4.59 % 2 14.16 4.94 3 19.25 3.86 4 14.43 6.99 5 31.92 5.30 6 37.49 6.20 a. Calculate the arithmetic average returns for large-company stocks and T-bills over this period b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this period. c. 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? D.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?
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