Risk Premiums: Refer to Table 10.1 in the text and look at the period from 1973 through 1978.

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

b. Calculate the standard deviation of return for large company stocks and Tbills over this period.

c. Calculate the observed risk premium in each year for the large company stock versus the Tbills. What was the arithmetic average risk premium over this period? what was the standard deviation of the risk premium over this period?

d. is it possible for the risk premium to be negative before an investment is undertaken? Can the risk premium be negative after the fact? explain Please answer in excel and show the work.

Consumer Price Index Year Long-Term Government Bonds 1972 U.S. Treasury Bills Consumer Price Index - 1.12% - 2.26 - 1.16 .58 - 6.40 - 9.32 - 10.27 1973 1974 1975 4.23 1976 9.15 -12.66 - 3.28 4.67 18.34 2.31 - 2.07 3.41 8.71 12.34 6.94 4.86 6.70 9.02 13.29 .76 -3.75 12.52 1.52 2.99 1.45 2.86 2.78 .00 .71 9.93 9.03 2.96 2.30 2.25 18.13 8.84 2.99 - 2.07 5.93 6.00 .75 .75 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Large-Company Stocks 18.99 - 14.69 -26.47 37.23 23.93 - 7.16 6.57 18.61 32.50 - 4.92 21.55 22.56 6.27 31.73 18.67 5.25 16.61 31.69 - 3.10 30.46 7.62 10.08 1.32 37.58 22.96 33.36 28.58 21.04 - 9.10 - 11.89 -22.10 28.68 10.88 4.91 15.79 5.49 -37.00 26.46 15.06 2.11 16.00 32.39 - 5.91 16 49.99 -- 2.11 16.53 39.03 32.51 - 8.09 8.71 22.15 5.44 20.04 8.09 22.32 -11.46 37.28 2.58 17.70 19.22 -12.76 22.16 5.30 14.08 1.62 10.34 10.35 7.29 7.99 5.87 5.07 5.45 7.64 10.56 12.10 14.60 10.94 8.99 9.90 7.71 6.09 5.88 6.94 8.44 7.69 5.43 3.48 3.03 4.39 5.61 5.14 5.19 4.86 4.80 5.98 3.33 1.61 1.03 1.43 3.30 4.97 4.52 1.24 8.92 3.83 3.79 3.95 3.80 1.10 4.43 4.42 4.65 6.11 3.06 2.90 2.75 2.67 2.54 3.32 1.70 1.61 2.68 3.39 1.55 2.38 1.88 3.26 1998 - .74 3.42 .37 2.99 2.90 1.76 1.73 1.36 .67 1.33 1.64 .97 1.92 3.46 3.04 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 .28 10.85 39.46 -25.61 7.73 35.75 1.80 14.69 2.54 4.08 .09 2.72 1.50 2.96 1.74 . 15 . 14 .06 -08 10.3 13.5%, low his bills wa return that the larger th typical Table 10 The Avera history ar pret this 1 will get ab If you individual is to add The obviou Calcula culating ave Accordingly to be of muc As you've pr AT