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 3.69
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 | 3.69 | 4.75 |
2 | 14.48 | 3.59 |
3 | 19.27 | 4.18 |
4 | 14.41 | 5.91 |
5 | 31.90 | 5.32 |
6 | 37.51 | 6.41 |
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 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 | % |
i already know large company stocks average return is 4.77 and T-bills average return is 5.03 and the large company stocks standard deviation is 24.86 but i dont know how to figure out the standard deviation for t-bills, the average risk premium and the standard deviation of risk premium. please help!
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