Consider the following table for a period of six years: Year 1 2 3 4 Returns Large-Company Stocks -15.798 -26.80 37.45 24.15 -7.60 6.79 U.S. Treasury Bills 7.518 8.10 6.09 6.17 5.56 7.97 a-1. Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a-2. Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a-1. Arithmetic average return a-2. Standard deviation Large-company stocks % % b-1. Average risk premium b-2. Risk premium standard deviation T-bills 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? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer percent rounded to 2 decimal places, e.g., 32.16. % b-2. What was the standard deviation of the risk premium over this period? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. % %
Consider the following table for a period of six years: Year 1 2 3 4 Returns Large-Company Stocks -15.798 -26.80 37.45 24.15 -7.60 6.79 U.S. Treasury Bills 7.518 8.10 6.09 6.17 5.56 7.97 a-1. Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a-2. Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a-1. Arithmetic average return a-2. Standard deviation Large-company stocks % % b-1. Average risk premium b-2. Risk premium standard deviation T-bills 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? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer percent rounded to 2 decimal places, e.g., 32.16. % b-2. What was the standard deviation of the risk premium over this period? Note: 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
1
2
GUAWN
3
4
5
6
Returns
Large-Company
Stocks
-15.79%
-26.80
37.45
24.15
-7.60
6.79
U.S. Treasury
Bills
7.51%
a-1. Arithmetic average return
a-2. Standard deviation
a-1. Calculate the arithmetic average returns for large-company stocks and T-bills over this time period.
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
a-2. Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period.
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
8.10
6.09
6.17
5.56
7.97
b-1. Average risk premium
b-2. Risk premium standard deviation
Large-company
stocks
%
%
T-bills
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?
Note: 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?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
%
%
%
%
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