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Suppose we observe the following returns for large company stocks and Treasury bills over a six-year period: 1 Year Large Company US Treasury Bill 4.00%

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Suppose we observe the following returns for large company stocks and Treasury bills over a six-year period: 1 Year Large Company US Treasury Bill 4.00% 4.62% 2 14.49 4.96 3 19.33 3.88 - 14.35 700 -31.84 5.38 6 37.04 6.43 4 5 a. If you don't know how to do these types of calculations, watch the lecture video that covers won video / work a very similar problem. 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. Use the observed risk premium in each year and the average risk premium calculated in part c-1 to obtain 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.) Stock in Daenerys Industries has a beta of 1.4. The market risk premium is 7 percent, and T-bills are currently yielding 4.4 percent. The company's most recent annual dividend was $1.60 per share, and dividends are expected to grow at an annual rate of 6 percent indefinitely If the stock sells for $32 per share, what is your best estimate of the company's cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity %

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