Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hello, I need a little help figuring out the answer to this homework problem. Can someone help me? Problem 10-8 Risk Premiums Suppose we have

Hello,

I need a little help figuring out the answer to this homework problem. Can someone help me?

image text in transcribed

Problem 10-8 Risk Premiums Suppose we have the following returns for large-company stocks and Treasury bills over a six year period arge Company 3.66 14.44 19.03 -14.65 -32.14 37.27 Treasury Bill 4.66 2.33 4.12 5.88 4.90 6.33 a. Calculate the arithmetic average returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) Average returns Large company stocks T-bills b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this period (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) Standard deviation Large company stocks T-bills c-1 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? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) Average risk premium c-2 Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the standard deviation of the risk premium over this period? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) Standard deviation

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_2

Step: 3

blur-text-image_3

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

The Economics Of Money Banking And Financial Markets

Authors: Frederic S. Mishkin

12th Global Edition

1292268859, 978-1292268859

More Books

Students also viewed these Finance questions

Question

3. What should a contract of employment contain?

Answered: 1 week ago

Question

1. What does the term employment relationship mean?

Answered: 1 week ago