Calculate the observed risk premium in each year

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Reference no: EM132007244

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	3.98	4.56
2	14.33	4.92
3	19.17	3.84
4	-14.51	6.98
5	-32.00	5.22
6	37.41	5.36

a. Calculate the arithmetic average returns for large-company stocks and T-bills over this period. answer with two decimal places.

Average returns

Large company stocks %

T-bills %

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

Standard deviation

Large company stocks %

T-bills %

c) Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the average risk premium over this period? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations.)

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? (Enter your answer as a percent rounded to 2 decimal places)

Standard deviation %

Reference no: EM132007244

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