Please fill out all the empty spaces and let me know what each number is for if

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Please fill out all the empty spaces and let me know what each number is for if you decide to post a table

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Consider the following table for a period of six years Returns Large-Company Stocks -15.39% -26.68 37.37 24.07 7.44 6.71 U.S Treasury Bills Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 7.43% 8.06 6.01 5.77 5.52 7.85 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 3.11 % 6.77 % 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

Explanation / Answer

Year Large US T-Bills risk premium Co Stocks r-rA rf-rfA (r-rA)^2 (rf-rfA)^2 rp = r-rf rp-rpA (rp-rpA)^2 r rf year1 -0.1539 0.0743 -0.1850 0.0066 0.034213 0.00004312 -0.2282 -0.1915 0.03668502 year2 -0.2668 0.0806 -0.2979 0.0129 0.088725 0.00016555 -0.3474 -0.3107 0.09655520 year3 0.3737 0.0601 0.3426 -0.0076 0.117398 0.00005827 0.3136 0.3503 0.12268674 year4 0.2407 0.0577 0.2096 -0.0100 0.043946 0.00010067 0.1830 0.2197 0.04825344 year5 -0.0744 0.0552 -0.1055 -0.0125 0.011123 0.00015708 -0.1296 -0.0929 0.00863660 year6 0.0671 0.0785 0.0360 0.0108 0.001298 0.00011592 -0.0114 0.0253 0.00063840 Total 0.1864 0.4064 0.296703 0.000641 -0.2200 0.31345541 Arithmetic Average of Large Company stocks =    (return1+return2+return3+return4+return5+return6)/6         rA =       0.1864/6 0.031067 or 3.11% Arithmetic Average of T-Bills           = (t-bill return 1+return2+return3+return4+return5+return6)/6                    rfA     = 0.4064/6 0.067733 or 6.77% Variance of returns of Large company stocks = Sum of (return on large stock companies - average return)^2/6   = 0.296703/6 0.04945 Standard Deviation of returns of Large company stocks = Square root of (variancce) = square root (0.04945) = 0.2223745 or 22.24% Variance of returns of T-Bills   = Sum of (return on T-bills - average return on t-bills)^2 /6 = 0.000641/6       = 0.0001068 Standard Deviation of T-Bill returns    =   Square root of (varaince of T-Bill returns)    = Square root of (0.000641)     = 0.025310 or 2.53% Risk-premium    rp =   return on large company stocks - t-bill rate    = rA - rf Arithmetic Average of risk premium rpA =   Sum of (rA-rf)/6              = -0.22/6 -0.0366667 or -3.67% Variance of risk premium       =     sum of ( risk premium - average risk premium )^2 / 6                   = 0.31345541/6 0.0522426 Standard Deviation of Risk Premium   =    Square root of (Variance of risk premium) =   Square root of (0.0522426)              = 0.2285663 or 22.86%

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