Question
In: Finance
Consider the following rates of return: Year / Large Company Stocks / US Treasury Bill 1...
Consider the following rates of return: Year / Large Company Stocks / US Treasury Bill 1 3.99 % 4.59 % 2 14.16 4.94 3 19.25 3.86 4 –14.43 6.99 5 –31.92 5.30 6 37.49 6.20 a. Calculate the arithmetic average returns for large-company stocks and T-bills over this period. b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this period. 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? 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?
Solutions
jeff jeffy answered 6 months agoRelated Solutions
Year Large – Company Stocks US Treasury Bill 1 3.67% 4.69% 2 14.32 3.55 3 19.11...
Year
Large – Company Stocks
US Treasury Bill
1
3.67%
4.69%
2
14.32
3.55
3
19.11
4.14
4
-14.57
5.89
5
-32.06
5.16
6
37.35
5.33
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.)
Large Company Stocks
4.64%
T-Bills
4.79%
b.
Calculate the standard deviation of the returns for
large-company stocks and T-bills over this...
The average return on large cap stocks has outpaced that of US Treasury bills by about...
The average return on large cap stocks has outpaced that of US
Treasury bills by about 7% per year since 1926. Why, then, does
anyone investment in Treasury Bills?
Consider the following table for a period of six years: Returns Year Large-Company Stocks U.S. Treasury...
Consider the following table for a period of six
years:
Returns
Year
Large-Company Stocks
U.S. Treasury Bills
1
–14.99
%
7.35
%
2
–26.56
8.02
3
37.29
5.93
4
23.99
5.37
5
–7.28
5.48
6
6.63
7.73
Calculate the arithmetic average returns for large-company stocks
and T-bills over this time period. (Do not round
intermediate calculations and enter your answers as a percent
rounded to 2 decimal places, e.g., 32.16.)
Arithmetic
average returns
Large-company
stock
%
T-bills
%
Calculate...
Consider the following table for a period of six years. Returns Year Large-Company Stocks U.S. Treasury...
Consider the following table for a period of six years.
Returns
Year
Large-Company Stocks
U.S.
Treasury Bills
Year 1
–
15.39
%
7.43
%
Year 2
–
26.68
8.06
Year 3
37.37
6.01
Year 4
24.07
5.77
Year 5
–
7.44
5.52
Year 6
6.71
7.85
Requirement 1:
Calculate the arithmetic average returns for large-company
stocks and T-bills over this time period.
(Do not round intermediate calculations.
Enter your answers as a percentage rounded to 2
decimal places (e.g., 32.16).)...
Consider the following table for a period of six years: Returns Year Large-Company Stocks U.S. Treasury...
Consider the following table for a period of six years: Returns
Year Large-Company Stocks U.S. Treasury Bills 1 –15.69 % 7.49 % 2
–26.77 8.09 3 37.43 6.07 4 24.13 6.07 5 –7.56 5.55 6 6.77 7.94
Calculate the arithmetic average returns for large-company stocks
and T-bills over this time period. Arithmetic average returns
Large-company stock % T-bills % Calculate the standard deviation of
the returns for large-company stocks and T-bills over this time
period. Standard deviation Large-company stock %...
Year Large Company US Treasury Bill 1 3.92 5.90 2 14.18 2.53 3 19.37 3.76 4...
Year
Large
Company
US Treasury
Bill
1
3.92
5.90
2
14.18
2.53
3
19.37
3.76
4
–14.31
7.16
5
–31.80
5.42
6
37.08
6.24
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....
Year Large Company US Treasury Bill 1 3.90% 5.84% 2 14.47 2.49 3 19.21 3.72 4...
Year
Large
Company
US Treasury
Bill
1
3.90%
5.84%
2
14.47
2.49
3
19.21
3.72
4
–14.47
7.14
5
–31.96
5.26
6
37.45
6.39
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.)
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...
13) Consider a Treasury bill with a rate of return of 5% and the following risky...
13)
Consider a Treasury bill with a rate of return of 5% and the
following risky securities:
Security A: E(r) = .15; variance = .0400
Security B: E(r) = .10; variance = .0225
Security C: E(r) = .12; variance = .1000
Security D: E(r) = .13; variance = .0625
The investor must develop a complete portfolio by combining the
risk-free asset with one of the securities mentioned above. The
security the investor should choose as part of her complete
portfolio...
Suppose today two-year US treasury bill is 2.15% and the two-year UK treasury bill is 1.0%....
Suppose today two-year US treasury bill is 2.15% and the
two-year UK treasury bill is 1.0%. Further suppose today spot
exchange rate is USD 1.25 per Euro and you know you will receive
one million euro exactly two years from now and you will have to
exchange those Euros in USD at that time. Can you engineer a
guaranteed exchange rate at which you will be able to exchange the
Euros for USD two years from now? Explain the arrangements.
Suppose we have the following returns for large-company stocks and Treasury bills over a six year...
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
3.92
5.90
2
14.18
2.53
3
19.37
3.76
4
–14.31
7.16
5
–31.80
5.42
6
37.08
6.24
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...
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