Question
Consider the following table for a period of six years. Year Returns Large-Company Stocks U.S. Treasury Bills 1973 14.69% 6.93% 1974 26.47 8.00 1975 37.23
Consider the following table for a period of six years.
| Year | Returns | |
|---|---|---|
| Large-Company Stocks | U.S. Treasury Bills | |
| 1973 | 14.69% | 6.93% |
| 1974 | 26.47 | 8.00 |
| 1975 | 37.23 | 5.80 |
| 1976 | 23.93 | 5.08 |
| 1977 | 7.16 | 5.12 |
| 1978 | 6.57 | 7.18 |
Calculate the arithmetic average returns for large-company stocks and T-bills over this time period.
Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period.
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?
What was the standard deviation of the risk premium over this period?
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Principles Of Corporate Finance Law
Authors: Eilis Ferran, Look Chan Ho
2nd Edition
0199671354, 978-0199671359
