Question
In: Finance
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).) |
| Arithmetic average returns | |
| Large-company stock | % |
| T-bills | % |
| Requirement 2: |
|
Calculate the standard deviation of the 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).) |
| Standard deviation | |
| Large-company stock | % |
| T-bills | % |
| Requirement 3: | |
| Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. | |
| (a) |
What was the arithmetic 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 percentage rounded to 2 decimal places (e.g., 32.16).) |
| Risk premium | % |
| (b) |
What was the standard deviation of the risk premium over this period? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
| Risk premium standard deviation | % |
Solutions
jeff jeffy answered 2 years agoRelated Solutions
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 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 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...
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 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-period: Year  
Suppose we have the following returns for large-company stocks
and Treasury bills over a six-period:
Year Large
Company US
Treasury Bill
1
3.88%
5.78%
2
14.31
2.45
3
19.05
3.68
4
-14.63
7.12
5
-32.12
4.92
6
37.29
4.89
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.)
b. Calculate the standard deviation of the returns for
large-company stocks and...
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 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...
The following table shows the nominal returns on U.S. stocks and the rate of inflation. Year...
The following table shows the nominal returns on U.S. stocks and
the rate of inflation. Year Nominal Return (%) Inflation (%) 2010
13.6 3.7 2011 8.6 2.8 2012 16.0 3.3 2013 4.1 4.4 2014 −40.2 .4 a.
What was the standard deviation of the nominal market returns? (Do
not make the adjustment for degrees of freedom described in
footnote 18.) (Use decimals, not percents, in your calculations. Do
not round intermediate calculations. Enter your answer as a percent
rounded to...
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