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

Question

  

  

Calculate the arithmetic average returns for large-company stocks and T-bills over this period. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))

  

  

Calculate the standard deviation of the returns for large-company stocks and T-bills over this period. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))

  

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 include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))

  

  

What was the standard deviation of the risk premium over this period? (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))

  

Consider the following table for a certain period.

Explanation / Answer

Requirement 1 )

Arithematic avg returns for large company stocks = 5.62%

Arithematic avg returns for US T-Bills = 6.91%

Requirement 2)

Std Dev of returns for large company stocks = 23.41%

Std Dev of returns for US T-Bills= 0.66%

Requirement 3)

Observed risk premium

Arithematic average of risk premium = -1.27%

Std. Dev of risk premium = 23.91%

Hope my answer helped. Please kindly rate my answer :)

Year Risk Premium=(Large stocks return - T Bill return) 1 -2.96% 2 7.94% 3 12.16% 4 -22.48% 5 -33.86% 6 31.56%

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