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 Large Company US Treasury Bill 1 3.70

image text in transcribed

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%

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

Step: 3

blur-text-image

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 financial management

Authors: Jeff Madura

9th Edition

978-0324593495, 324568207, 324568193, 032459349X, 9780324568202, 9780324568196, 978-0324593471

More Books

Students also viewed these Finance questions

Question

How would you describe the work atmosphere?

Answered: 1 week ago

Question

differentiate the function ( x + 1 ) / ( x ^ 3 + x - 6 )

Answered: 1 week ago