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 time period. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

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).)

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).)

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).)

Consider the following table for a period of six years.

Explanation / Answer

Answer for requirement 1:

Formula for arithmetic mean is Sum of all values/count of all values.

Answer for requirement 2:

Formula for standard deviation of a sample =Square root of( variance/n-1)

Variance = square of(x-Mean of x)

Answer for requirement 3 a and 3 b:

Formula for risk premium = Return on large stocks- return on t. bills

Formula for arithmetic mean is Sum of all values/count of all values.

Formula for standard deviation of a sample =Square root of( variance/n-1)

Variance = square of(x-Mean of x)

Year Large companies stock (X) US Treasury bills (Y) 1 -15.79 7.51 2 -26.8 8.1 3 37.45 6.09 4 24.15 6.17 5 -7.6 5.56 6 6.79 7.97 Total 18.2 41.4 Arithmetic mean(M) 3.03 6.9

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