a. Calculate the arithmetic average returns for large-company stocks and T-bills

Question

a. Calculate the arithmetic average returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) c-1 Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the arithmetic average risk premium over this period? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) 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? (Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

note : M is mean here

risk premium is calculated as excess of market return over risk free securityor named as T- Bill

year large co T-Bill 1 3.97 4.53 2 14.45 4.9 3 19.09 3.8 4 -14.59 6.97 5 -32.08 4.96 6 37.34 6.35 total 28.18 31.51 divided by 6 6 6 average 4.70 5.25

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