Question
In: Finance
Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period:...
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. 3.99%. 6.65%
2. 14.50. 4.46
3 19.39 4.33
4 -14.29 7.34
5 -31.78 5.44
6 37.10 6.45
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 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?
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Solutions
jeff jeffy answered 1 year agoRelated Solutions
Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period:...
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 3.66% 4.66% 2 14.44 2.33 3 19.03 4.12 4 –14.65 5.88
5 –32.14 4.90 6 37.27 6.33 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.) b. Calculate the
standard deviation of the...
Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period:...
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 and enter your answers as a percent
rounded to 2 decimal places, e.g., 32.16.)
b.
Calculate the standard deviation of the...
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...
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 %...
Suppose we have the following Treasury bill returns and inflation rates over an eight year period:...
Suppose we have the following Treasury bill returns and
inflation rates over an eight year period:
Year
Treasury
Bills
Inflation
1
9.23%
11.07%
2
10.10
14.66
3
7.84
9.03
4
6.92
6.59
5
7.42
8.79
6
9.73
11.23
7
12.57
15.40
8
14.35
15.20
a.
Calculate the average return for Treasury bills and the average
annual inflation...
Suppose we have the following Treasury bill returns and inflation rates over an eight year period:...
Suppose we have the following Treasury bill returns and
inflation rates over an eight year period:
Year
Treasury
Bills
Inflation
1
7.37%
8.79%
2
8.07
12.42
3
5.95
7.02
4
5.15
4.94
5
5.53
6.78
6
7.72
9.10
7
10.64
13.37
8
12.18
12.60
Calculate the standard deviation of Treasury bill returns and
inflation over this period. (Do...
Suppose we have the following Treasury bill returns and inflation rates over an eight-year period: Year...
Suppose we have the following Treasury bill returns and
inflation rates over an eight-year period:
Year
Treasury Bills
Inflation
1
8.11%
9.83%
2
8.92
13.36
3
6.74
7.87
4
5.88
5.61
5
6.32
7.63
6
8.57
10.01
7
11.55
14.32
8
13.21
13.77
a.
Calculate the average return for Treasury bills and the average
annual inflation rate...
Historical average returns for Large Company Common Stocks, Long Term Government Bonds, and US Treasury Bills...
Historical average returns for Large Company Common Stocks, Long
Term Government Bonds, and US Treasury Bills for the period 10-year
period of 1999 through 2008 are shown in the following table. Use
these data to solve the next several problems.
Year
Large Common Stock
Long Term Government Bonds
US Treasury Bills
1999
0.2104
-0.0751
0.0480
2000
-0.0910
0.1722
0.0598
2001
-0.1189
0.0551
0.0333
2002
-0.2210
0.1515
0.0161
2003
0.2889
0.0201
0.0094
2004
0.1088
0.0812
0.0114
2005
0.0491
0.0689
0.0279
2006...
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