Question
Consider the following table for a period of six years: Returns Year Large-Company Stocks U.S. Treasury Bills 1 16.09 % 7.57 % 2 26.89 8.13
Consider the following table for a period of six years:
Returns | |||||||
Year | Large-Company Stocks | U.S. Treasury Bills | |||||
1 | 16.09 | % | 7.57 | % | |||
2 | 26.89 | 8.13 | |||||
3 | 37.51 | 6.15 | |||||
4 | 24.21 | 6.47 | |||||
5 | 7.72 | 5.59 | |||||
6 | 6.85 | 8.06 | |||||
Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Arithmetic average returns | |
a) Large-company stock | % |
b) T-bills | % |
Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Standard deviation | |
c) Large-company stock | % |
d) T-bills | % |
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.) e) Average risk premium % 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.) f) Risk premium standard deviation %
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