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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 6.53% 4.38 4.25
Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period Year Large Company US Treasury Bill 6.53% 4.38 4.25 7.30 4.94 6.14 3.95% 2 3 4 19.07 14.61 -32.10 37.32 6 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.) 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.) b. 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.) a. Large-company stocks T-bills Large-company stocks T-bills b. c-1. Average risk premium c-2. Standard deviation
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