Question
In: Finance
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 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. | 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 and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
I am very confused I have tried this many times but I am not
sure if I am correct please show step by step and I will
Rate!
Thank you!
| a. | Large-company stocks | 4.77 | % |
| T-bills | 5.14 | % | |
| b. | Large-company stocks | 22.70 | % |
| T-bills | 1.59 | % | |
| c-1. | Average risk premium | -0.37 | % |
| c-2. | Standard deviation | 23.30 | % |
Solutions
jeff jeffy answered 2 years agoRelated Solutions
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 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...
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...
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.
A 2-year Treasury bill currently offers a 22% rate of return. A 3-year Treasury note offers...
A 2-year Treasury bill currently offers a
22%
rate of return. A 3-year Treasury note offers a
44%
rate of return. Under the expectations theory, what rate of
return do investors expect a 1-year Treasury bill to pay 2 year
from now?
The rate of return investors expect a 1-year Treasury bill to
pay 2 years from now is
A 2%, 3-year US Treasury is selling at 100.25 . The 5% , 3-year IBM is...
A 2%, 3-year US Treasury is selling at 100.25 . The 5% , 3-year
IBM is selling at 100.65. Both bonds pay interest semi-annually.
The G-spread in basis points on the IBM bond is closest to
a. 264 bps.
b. 285 bps.
c. 300 bps
d. 345 bps
e. 435 bps
A 2%, 3-year US Treasury is selling at 100.25 . The 5% , 3-year IBM is...
A 2%, 3-year US Treasury is selling at 100.25 . The 5% , 3-year
IBM is selling at 100.65. Both bonds pay interest semi-annually.
The G-spread in basis points on the IBM bond is closest to
a. 264 bps.
b. 285 bps.
c. 300 bps
d. 345 bps
e. 435 bps
A 3-year floating-rate note pays 6-month Libor plus 140 bps. The
floater is priced at 97 per 100 of par value. Current 6-month Libor
is 1.00%. Assume a 30/360...
Consider the following rates of return: Year Large-Company Stocks US Treasury Bills 1 3.99 % 4.59...
Consider the following rates of return:
Year
Large-Company
Stocks
US Treasury Bills
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. (Do not round
intermediate calculations and 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...
Treasury is: Spot 1-year Treasury is 4% Spot 2-year treasury is 4.5% B Corporate Debt interest...
Treasury is: Spot 1-year Treasury is 4% Spot 2-year treasury is
4.5%
B Corporate Debt interest annually Spot 1 year 8.5%, Spot 2
years 9.5%
Forward 1 Year maturity
Let’s call the Treasury x
The Corporate debt is called y
What is the value of x the forward rate on one-year maturity
Treasuries delivered in one year?
What is the value of y the forward rate on one-year maturity B
corporate debt delivered in one year?
Exercising the term structure...
You bought a 1-year Treasury bill with a face value of $1,000 for $856.42. 3 Months...
You bought a 1-year Treasury bill with a face value of $1,000
for $856.42. 3 Months later, you sold it for $890.26.
What was your annualized return?
Please include Formula and what each formula component is
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