Arithmetic average returns for large-company stocks

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Reference no: EM131984174

Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period: Year Large Company US Treasury Bill

Large company U.S. Treasury Bill

1 3.97 6.59

2 14.34 4.42

3 19.23 4.29

4 – 14.45 7.32

5 – 31.94 5.28

6 37.47 5.38

a. 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 percent rounded to 2 decimal places, e.g., 32.16.) Average returns Large-company stocks % T-bills %

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.) Standard deviation Large-company stocks % T-bills %

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. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average risk premium %

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.) Standard deviation %

Reference no: EM131984174

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