Refer to Table 12.1 in the text and look at the period from 1970 through 1975.

Large Company Stocks Long Term government Bonds US Treasury Bills Consumer Price Index

1970 3.94 18.92 6.50 5.57

1971 14.30 11.24 4.36 3.27

1972 18.99 2.39 4.23 3.41

1973 -14.69 3.30 7.29 8.71

1974 -26.47 4.00 7.99 12.34

1975 37.23 5.52 5.87 6.94

a.	Calculate the arithmetic average returns for large-company stocks and T-bills over this period. (Round your answers 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 and round your final answers 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 and round your final answers 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? (Round your answer to 2 decimal places. (e.g., 32.16))

Standard deviation

%