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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 3.90% 5.84%

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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 3.90% 5.84% 2. 14.47 2.49 3 19.21 3.72 4 -14.47 7.14 -31.96 5.26 37.45 6.39 OU WN 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.) this period. (Do not round intermediate calculations al percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation of the returns for large- over this period. (Do not round intermediate calculation as a percent rounded to 2 decimal places, e.g., 32.16.) C-1. Calculate the observed risk premium in each year for the versus the T-bills. What was the average risk premium ove answer should be indicated by a minus sign. Do not roun calculations and enter your answer as a percent rounded e.g., 32.16.) c-2. Calculate the observed risk premium in each year for the lar versus the T-bills. What was the standard deviation of the ris period? (Do not round intermediate calculations and enter percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. a. Large-company stocks T-bills Large-company stocks T-bills b. 4.77 % 5.14 % 22.70 X % 1.59 X % 1. Average risk premium -0.37 % C- 2. Standard deviation 23.30 %

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