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Long question Suppose we have the following returns for large-company stocks and Treasury bills over a six year period: Year Large Company US Treasury Bill

Long question

Suppose we have the following returns for large-company stocks and Treasury bills over a six year period:

Year Large Company US Treasury Bill
1 3.69 4.75
2 14.48 3.59
3 19.27 4.18
4 -14.41 5.91
5 -31.90 5.32
6 37.51 6.41

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 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 %

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