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 |
3.98 |
4.56 |
| 2 |
14.33 |
4.92 |
| 3 |
19.17 |
3.84 |
| 4 |
-14.51 |
6.98 |
| 5 |
-32.00 |
5.22 |
| 6 |
37.41 |
5.36 |
a. Calculate the arithmetic average returns for large-company stocks and T-bills over this period. answer with two decimal places.
Average returns
Large company stocks %
T-bills %
b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this period.
Standard deviation
Large company stocks %
T-bills %
c) Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the average risk premium over this period? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations.)
Average risk premium %
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? (Enter your answer as a percent rounded to 2 decimal places)
Standard deviation %