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Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period: Year Large Company US Treasury Bill 1 3.70
Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period: Year Large Company US Treasury Bill 1 3.70 4.78 2 3 4 5 -31.82 6 37.06 14.36 19.35 -14.33 3.61 4.20 5.92 5.40 5.41 a. Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. (Do not round Intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Large-company stocks T-bills Average returns b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period. (Do not round Intermediate calculations. Enter your answers as a percent rounded 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 arithmetic average risk premium over this period? (A negative answer should be Indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded 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? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation 1%
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