Consider the following table for a period of six years.
Returns Year Large-Company Stocks U.S.
Treasury Bills Year 1 â 15.89 % 7.53 % Year 2 â 26.83 8.11 Year 3 37.47 6.11 Year 4 24.17 6.27 Year 5 â 7.64 5.57 Year 6 6.81 8.00
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 %
Consider the following table for a period of six years.
| Returns | |||||||
| Year | Large-Company Stocks | U.S. Treasury Bills | |||||
| Year 1 | â | 15.89 | % | 7.53 | % | ||
| Year 2 | â | 26.83 | 8.11 | ||||
| Year 3 | 37.47 | 6.11 | |||||
| Year 4 | 24.17 | 6.27 | |||||
| Year 5 | â | 7.64 | 5.57 | ||||
| Year 6 | 6.81 | 8.00 | |||||
| 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 | % |
Related questions
| 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 | 3.66 | 4.66 |
| 2 | 14.44 | 2.33 |
| 3 | 19.03 | 4.12 |
| 4 | â14.65 | 5.88 |
| 5 | â32.14 | 4.90 |
| 6 | 37.27 | 6.33 |
| a. | Calculate the arithmetic average returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
| 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. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Standard deviation | |
| Large company stocks | % |
| T-bills | % |
| c-1 | 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. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| 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? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Standard deviation | % |
| 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 | 3.92 | 5.90 |
| 2 | 14.18 | 2.53 |
| 3 | 19.37 | 3.76 |
| 4 | â14.31 | 7.16 |
| 5 | â31.80 | 5.42 |
| 6 | 37.08 | 6.24 |
| a. | Calculate the arithmetic average returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
| 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. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Standard deviation | |
| Large company stocks | % |
| T-bills | % |
| c-1 | 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. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| 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? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Standard deviation | % |
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 | â14.51 | 6.98 |
| 5 | â32.00 | 5.22 |
| 6 | 37.41 | 5.36 |
| a. | Calculate the arithmetic average returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
| 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. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Standard deviation | |
| Large company stocks | % |
| T-bills | % |
| c-1 | 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. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| 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? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Standard deviation | % |
