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 roundod to 2 decimal places (e.g.. 32.16).) 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).) 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?

Explanation / Answer

Year Large Company Stockks USTreasury Bills Risk Premium 1973 -14.69% 7.29% -21.98% 1974 -26.47% 7.99% -34.46% 1975 37.23% 5.87% 31.36% 1976 23.93% 5.07% 18.86% 1977 -7.16% 5.45% -12.61% 1978 6.57% 7.64% -1.07% 3.24% 6.55% -3.32% Risk Premium AVERAGE(B2:B7) AVERAGE(C2:C7) 22.01% 1.13% 24.92% STDEV(B2:B8) STDEV(C3:C9) STDEV(D3:D8)

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