Problem $12-8$ Risk Premiums $[$LO$2,3]$ Problem $12-8$ Risk Premiums $[$LO$2,3]$

Suppose we have the following returns for large$-$company stocks and Treasury bills over

a six$-$year period:

a$.$ Calculate the arithmetic average returns for large$-$company stocks and T$-$bills over

this period. $($Do not round Intermedlate calculations and enter your answers as a

percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$ Calculate the standard deviation of the returns for large$-$company stocks and T$-$bills

over this period. $($Do not round Intermedlate calculations and enter your answers

as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

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? $($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$.,32\mathrm{.}16.)$

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 Intermedlate calculations and enter your answer as a

percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

Suppose we have the following returns for large$-$company stocks and Treasury bills over

a six$-$year period:

a$.$ Calculate the arithmetic average returns for large$-$company stocks and T$-$bills over

this period. $($Do not round Intermedlate calculations and enter your answers as a

percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$ Calculate the standard deviation of the returns for large$-$company stocks and T$-$bills

over this period. $($Do not round Intermedlate calculations and enter your answers

as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

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? $($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$.,32\mathrm{.}16.)$

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 Intermedlate calculations and enter your answer as a

percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$