Question
Consider the following table for a period of six years: Returns Year Large-Company Stocks U.S. Treasury Bills 1 15.69 % 7.49 % 2 26.77 8.09
Consider the following table for a period of six years: Returns Year Large-Company Stocks U.S. Treasury Bills 1 15.69 % 7.49 % 2 26.77 8.09 3 37.43 6.07 4 24.13 6.07 5 7.56 5.55 6 6.77 7.94 Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. Arithmetic average returns Large-company stock % T-bills % Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period. Standard deviation Large-company stock % T-bills % 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? (A negative answer should be indicated by a minus sign. Average risk premium % b. What was the standard deviation of the risk premium over this period? Risk premium standard deviation %
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