Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Suppose we have the following returns for large-company stocks and Treasury bills over a six year period: Year 1 2 3 4 5 6 Large
Suppose we have the following returns for large-company stocks and Treasury bills over a six year period: Year 1 2 3 4 5 6 Large Company US Treasury Bill 3.98 6.62 14.17 4.44 19.31 4.31 -14.37 7.33 -31.86 5.36 37.02 6.23 a. Calculate the arithmetic average returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) Average returns % Large company stocks T-bills % b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) Standard deviation % Large company stocks T-bills % c-1 Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the arithmetic average risk premium over this period? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) Average risk premium % 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. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) Standard deviation %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started