Question: Answer Question and please show work. Problem 10-8 Risk Premiums LO 2] Consider the following table for a period of six years Returns Large-Company Stocks
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Problem 10-8 Risk Premiums LO 2] Consider the following table for a period of six years Returns Large-Company Stocks U.S Treasury Bills ear Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 15.09% -26.59 37.31 24.01 8.03 5.95 5.47 5.49 7.76 6.65 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
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