# Question

Refer to Table 10.1 in the text and look at the period from 1973 through 1978.

a. Calculate the arithmetic average returns for large-company stocks and T-bills over this time period.

b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period.

c. 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? What was the standard deviation of the risk premium over this period?

Table 10.1

a. Calculate the arithmetic average returns for large-company stocks and T-bills over this time period.

b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period.

c. 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? What was the standard deviation of the risk premium over this period?

Table 10.1

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