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Refer to the spreadsheet titled Rates of Return 1926-2013. a. For large cap stocks, calculate the arithmetic average of annual time-series of excess returns. Also
Refer to the spreadsheet titled Rates of Return 1926-2013. a. For large cap stocks, calculate the arithmetic average of annual time-series of excess returns. Also calculate the standard deviation of annual excess returns. What is the Sharpe ratio implied by those numbers? b. Do the same analysis for small cap stocks. c. Which portfolio, large cap or small cap, have a higher Sharpe ratio?
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