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 3.97
| 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 | 3.97 | 4.53 |
| 2 | 14.45 | 4.90 |
| 3 | 19.09 | 3.82 |
| 4 | 14.59 | 6.97 |
| 5 | 32.08 | 4.96 |
| 6 | 37.34 | 6.35 |
| Calculate the arithmetic average returns for large-company stocks and T-bills over this period. Calculate the standard deviation of the returns for large-company stocks and T-bills over this period
|
| 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? |
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Roadmap To The Markets
Authors: Tom Busby
1st Edition
0934380856, 978-0934380850
