Refer to Table 10.1 in the text and look at the period from 1973 through 1978. a.
Question:
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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Related Book For
Corporate Finance Core Principles and Applications
ISBN: 978-0077905200
3rd edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford
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