Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the following table for a period of six years. Returns U.S. Treasury Year 1973 Large-Company Stocks Bills -14.69% 6.93% 1974 -26.47 8.00 1975

image text in transcribed

Consider the following table for a period of six years. Returns U.S. Treasury Year 1973 Large-Company Stocks Bills -14.69% 6.93% 1974 -26.47 8.00 1975 37.23 5.80 1976 23.93 5.08 1977 1978 -7.16 6.57 5.12 7.18 a. Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. Note: 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 time period. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. 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? Note: 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. d. What was the standard deviation of the risk premium over this period? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Large company stock T-bills % % b. Large company stock % T-bills % c. Risk premium %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Personal Finance An Integrated Planning Approach

Authors: Ralph R Frasca

8th edition

136063039, 978-0136063032

More Books

Students also viewed these Finance questions

Question

How do the two components of this theory work together?

Answered: 1 week ago