In: Finance
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. (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 | % |