Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period: Year Large-Company stocks US Treasury bills 1 3.89% 5.81% 2 14.14 2.47 3 19.13 3.70 4 14.55 7.13 5 32.04 5.18 6 37.37 6.16

a. Calculate the arithmetic average returns for large-company stocks and T-bills over this period.

B. Calculate the standard deviation of the returns for large-company stocks and T-bills over this period.

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.

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?