IIII. 4. The following table shows the rate of returns for large company stocks and Treasury bills (T - bills) for year 1970 through 1975: Year Large co. stock return T - bill return 1970 3.94 % 6.50% 1971 14.30 4.36 1972 18.99 4.23 1973 -14.69 7.29 1974-26.47 7.99 1975 37.23 5.87 (1) Please calc ulate the risk premium in each year for the large - company stocks versus the T-bills. (2) What was the arithmetic average risk premium over this period? What was the standard deviation of the risk premium over this period? (3) Is it possible for the risk premium to be negative before an investment is undertaken? Can the risk premium be negative after the fact? Explain. note: Please dont give me no Chat GPD answers. Prever Excel and please show the formula used in excel. Thanks

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
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IIII. 4. The following table shows the rate of returns for large company stocks and Treasury bills (T - bills) for year 1970
through 1975: Year Large co. stock return T - bill return
1970 3.94 % 6.50% 1971 14.30 4.36 1972 18.99 4.23 1973 -14.69 7.29 1974-26.47 7.99 1975 37.23 5.87 (1) Please calc
ulate the risk premium in each year for the large - company stocks versus the T-bills. (2) What was the arithmetic
average risk premium over this period? What was the standard deviation of the risk premium over this period? (3) Is it
possible for the risk premium to be negative before an investment is undertaken? Can the risk premium be negative after
the fact? Explain. note: Please dont give me no Chat GPD answers. Prever Excel and please show the formula used in
excel. Thanks
Transcribed Image Text:IIII. 4. The following table shows the rate of returns for large company stocks and Treasury bills (T - bills) for year 1970 through 1975: Year Large co. stock return T - bill return 1970 3.94 % 6.50% 1971 14.30 4.36 1972 18.99 4.23 1973 -14.69 7.29 1974-26.47 7.99 1975 37.23 5.87 (1) Please calc ulate the risk premium in each year for the large - company stocks versus the T-bills. (2) What was the arithmetic average risk premium over this period? What was the standard deviation of the risk premium over this period? (3) Is it possible for the risk premium to be negative before an investment is undertaken? Can the risk premium be negative after the fact? Explain. note: Please dont give me no Chat GPD answers. Prever Excel and please show the formula used in excel. Thanks
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