Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. b-1. What was the arithmetic average risk premium over this period? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b-2. What was the standard deviation of the risk premium over this period? (Do not round intermediate calculations and enter your answer as a percent rounded 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. b-1. What was the arithmetic average risk premium over this period? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b-2. What was the standard deviation of the risk premium over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Consider the following table for a period of six years:
Year
123456
Large-
Company
Stocks
- 16.09%
-26.89
37.51
24.21
7.72
6.85
Returns
U.S.
Treasury Bills
7.57%
8.13
6.15
6.47
5.59
8.06

Transcribed Image Text:Calculate the observed risk premium in each year for the large-company stocks versus
the T-bills.
b-1. What was the arithmetic average risk premium over this period? (A negative
answer should be indicated by a minus sign. Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.)
b-2. What was the standard deviation of the risk premium over this period? (Do not
round intermediate calculations and enter your answer as a percent rounded to
2 decimal places, e.g., 32.16.)
b-1. Average risk premium
b-2. Risk premium standard deviation
%
%
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