Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period: Year Large-Company US Treasury Bill 1 3.91 5.87 2 14.35 2.51 3 19.29 374 4 -14.39 7.15 5 -31.88 5.34 6 37.00 5.39 a. b. Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. (Do not round intermediate calculations and enter your answers as a percent 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 percent rounded 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? (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.) 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? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Large-company stocks average return % T-bill average return % b. Large-company stocks standard deviation % T-bill standard deviation % c-1. Average risk premium % c-2. Risk premium standard deviation % B Prev 4 of 7 Next>
Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period: Year Large-Company US Treasury Bill 1 3.91 5.87 2 14.35 2.51 3 19.29 374 4 -14.39 7.15 5 -31.88 5.34 6 37.00 5.39 a. b. Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. (Do not round intermediate calculations and enter your answers as a percent 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 percent rounded 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? (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.) 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? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Large-company stocks average return % T-bill average return % b. Large-company stocks standard deviation % T-bill standard deviation % c-1. Average risk premium % c-2. Risk premium standard deviation % B Prev 4 of 7 Next>
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
Related questions
Question
Transcribed Image Text:Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period:
Year
Large-Company US Treasury Bill
1
3.91
5.87
2
14.35
2.51
3
19.29
374
4
-14.39
7.15
5
-31.88
5.34
6
37.00
5.39
a.
b.
Calculate the arithmetic average returns for large-company stocks and T-bills over
this time period. (Do not round intermediate calculations and enter your answers
as a percent 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 percent rounded 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? (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.)
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? (Do not round intermediate calculations. Enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.)
a.
Large-company stocks average return
%
T-bill average return
%
b.
Large-company stocks standard deviation
%
T-bill standard deviation
%
c-1. Average risk premium
%
c-2. Risk premium standard deviation
%
B
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