Consider the following table for a period of six years Returns Year U.S. Treasur
ID: 2787591 • Letter: C
Question
Consider the following table for a period of six years Returns Year U.S. Treasury Bills 7.31% 8.00 5.89 5.17 5.46 7.67 -14.79% -26.50 37.25 23.95 6.59 Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) returns 3.22 % 6.58 % T-bills Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g, 32.16.) Standard deviation T-bills 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? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average risk premium b. What was the standard deviation of the risk premium over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Risk premium standard deviation -3.37 %Explanation / Answer
Large T Bill Risk premium -14.79% 7.31% -22.10% -26.50% 8.00% -34.50% 37.25% 5.89% 31.36% 23.95% 5.17% 18.78% -7.20% 5.46% -12.66% 6.59% 7.67% -1.08% average 3.22% 6.58% -3.37% std dev 24.15% 1.22% 24.93%