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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 3.70% 4.78%

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 14.36 3.61
3 19.35 4.20
4 14.33 5.92
5 31.82 5.40
6 37.06 5.41

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.)

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96 96 96 a. Large-company stocks T-bills b. Large-company stocks T-bills C-1. Average risk premium |c-2. Standard deviation 96 96 96

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