What was the standard deviation of the risk premium

Assignment Help Finance Basics

Reference no: EM131960772

Question: Consider the following table for a period of six years.

	Returns
Year	Large-Company Stocks	U.S. Treasury Bills
Year 1	-14.89%	7.33%
Year 2	-26.53	8.01
Year 3	37.27	5.91
Year 4	23.97	5.27
Year 5	-7.24	5.47
Year 6	6.61	7.70

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 ? %

Reference no: EM131960772

Questions Cloud

What is the cost of the portfolio : Consider the following portfolio: - Long 3 calls with strike price 98.0 and price 21.278 - Short 0 calls with strike price 98.0 and price 21.278.

Explain how the number of page faults depends on page size : In this lab you will simulate demand paging and see how the number of page faults depends on page size, program size, replacement algorithm, and job mix.

How will you manage your credit card debt : What factor(s) would cause you to accept this offer? What factor(s) would cause you to decline this offer? Be specific and thorough in your response.

Tax be allocated between consumers and producers : How will the burden of this tax be allocated between consumers and producers? What will be the loss of consumer and producer surplus?

What was the standard deviation of the risk premium : What was the standard deviation of the risk premium over this period? (Do not round intermediate calculations. Enter your answer as a percentage rounded.

Diagram of the market for groceries : A small town is served by many perfectly competing supermarkets, which have constant marginal cost.

Write a research report on security in cloud computing : Write a Research report on Security in Cloud computing. Report should contain pictorial representations and tables or statistics too.

Economic profits are zero in the long run : Since firms in perfect competition can enter and exit the market in the long run, their economic profits are zero in the long run.

Write down some examples of industries : Write down some examples of industries that are (close to) perfectly competitive. What attributes do they have to be considered perfectly competitive?

User Account

All Pages