Question
Year Large-Company Stocks U.S. Treasury Bills 1 -14.69 7.29 2 -26.47 7.99 3 37.23 5.87 4 23.93 5.07 5 -7.16 5.45 6 6.57 7.64 1.
Year | Large-Company Stocks | U.S. Treasury Bills |
1 | -14.69 | 7.29 |
2 | -26.47 | 7.99 |
3 | 37.23 | 5.87 |
4 | 23.93 | 5.07 |
5 | -7.16 | 5.45 |
6 | 6.57 | 7.64 |
1. Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. 2. Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period 3. 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? What was the standard deviation of the risk premium over this period?
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