Consider the following table for a period of six years: Returns Year Large-Company Stocks U.S. Treasury...

90.2K

Verified Solution

Question

Finance

Consider the following table for a period of six years: ReturnsYear Large-Company Stocks U.S. Treasury Bills 1 –15.69 % 7.49 % 2–26.77 8.09 3 37.43 6.07 4 24.13 6.07 5 –7.56 5.55 6 6.77 7.94Calculate the arithmetic average returns for large-company stocksand T-bills over this time period. Arithmetic average returnsLarge-company stock % T-bills % Calculate the standard deviation ofthe returns for large-company stocks and T-bills over this timeperiod. Standard deviation Large-company stock % T-bills %Calculate the observed risk premium in each year for thelarge-company stocks versus the T-bills. a. What was the arithmeticaverage risk premium over this period? (A negative answer should beindicated by a minus sign. Average risk premium % b. What was thestandard deviation of the risk premium over this period? Riskpremium standard deviation %

Answer & Explanation Solved by verified expert

3.9 Ratings (766 Votes)

SEE THE IMAGE ANY See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Consider the following table for a period of six years: ReturnsYear Large-Company Stocks U.S. Treasury Bills 1 –15.69 % 7.49 % 2–26.77 8.09 3 37.43 6.07 4 24.13 6.07 5 –7.56 5.55 6 6.77 7.94Calculate the arithmetic average returns for large-company stocksand T-bills over this time period. Arithmetic average returnsLarge-company stock % T-bills % Calculate the standard deviation ofthe returns for large-company stocks and T-bills over this timeperiod. Standard deviation Large-company stock % T-bills %Calculate the observed risk premium in each year for thelarge-company stocks versus the T-bills. a. What was the arithmeticaverage risk premium over this period? (A negative answer should beindicated by a minus sign. Average risk premium % b. What was thestandard deviation of the risk premium over this period? Riskpremium standard deviation %