Question
Consider the following table for a certain period. Returns Year Large-Company Stocks U.S. Treasury Bills 1 3.54% 6.60% 2 14.10 6.26 3 17.99 4.43 4
| Consider the following table for a certain period. |
| Returns | ||
| Year | Large-Company Stocks | U.S. Treasury Bills |
| 1 | 3.54% | 6.60% |
| 2 | 14.10 | 6.26 |
| 3 | 17.99 | 4.43 |
| 4 | -15.29 | 7.79 |
| 5 | -25.97 | 7.29 |
| 6 | 37.73 | 6.97 |
| Requirement 1: |
| Calculate the arithmetic average returns for large-company stocks and T-bills over this period. |
| Requirement 2: |
| Calculate the standard deviation of the returns for large-company stocks and T-bills over this period. |
| Requirement 3: |
| Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. |
| (a) | What was the arithmetic average risk premium over this period? |
| (b) | What was the standard deviation of the risk premium over this period? |
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Buyable Your Guide To Building A Self Managing Fast Growing And High Profit Business
Authors: Steve Preda
1st Edition
0998447846, 978-0998447841
