Question
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 3.90
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 | 3.90 | 5.84 |
2 | 14.47 | 2.49 |
3 | 19.21 | 3.72 |
4 | -14.47 | 7.14 |
5 | -31.96 | 5.26 |
6 | 37.45 | 6.39 |
a. Calculate the arithmetic average returns for large-company stocks and T-bills over this period. (Round your answers to 2 decimal places. (e.g., 32.16))
Average returns
Large company stocks % ANSWER 4.8
T-bills % 5.1
b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
Standard deviation
Large company stocks % ANSWER 24.86
T-bills % ANSWER 1.74
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? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Average risk premium % ANSWER: -.37
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 round your final answer to 2 decimal places. (e.g., 32.16))
Standard deviation % ??
I just need help figuring out the standard deviation of the risk premium
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