Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period:
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Question:
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 | 3.96 | 8.56 |
2 | 14.46 | 9.40 |
3 | 19.15 | 8.27 |
4 | 14.53 | 7.31 |
5 | 32.02 | 5.20 |
6 | 37.41 | 6.37 |
a. | 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.) |
b. | 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 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 arithmetic 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. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Related Book For
College Algebra
ISBN: 978-0134697024
12th edition
Authors: Margaret L. Lial, John Hornsby, David I. Schneider, Callie Daniels
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