Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose we have the following returns for large company stocks and Treasury bills over a six-year period: Year 1 2 3 4 5 6 OU

image text in transcribed

Suppose we have the following returns for large company stocks and Treasury bills over a six-year period: Year 1 2 3 4 5 6 OU WN Large Company US Treasury Bill 3.66% 4.66% 14.44 2.33 19.03 4.12 -14.65 5.88 -32.14 4.90 37.27 6.33 a. Calculate the arithmetic average returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) 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., 32.16.) 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 intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) % % a. Large-company stocks T-bills b. Large-company stocks T-bills C-1. Average risk premium c-2. Standard deviation % % 24.98%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Trade Finance

Authors: Indian Institute Of Banking & Finance

1st Edition

9386394723, 978-9386394729

More Books

Students also viewed these Finance questions

Question

Classify delivery styles by type.

Answered: 1 week ago