Transcribed Image Text
Suppose we have the following returns for large-company stocksand Treasury bills over a six-year period:YearLarge CompanyUS Treasury Bill1 3.69%4.75%2 14.483.593 19.274.184–14.415.915–31.905.326 37.516.41a.Calculate the arithmetic average returns for large-companystocks and T-bills over this period. (Do not roundintermediate calculations and enter your answers as a percentrounded to 2 decimal places, e.g., 32.16.)b.Calculate the standard deviation of the returns forlarge-company stocks and T-bills over this period. (Do notround intermediate calculations and enter your answers as a percentrounded to 2 decimal places, e.g., 32.16.)c-1.Calculate the observed risk premium in each year for thelarge-company stocks versus the T-bills. What was the average riskpremium over this period? (A negative answer should beindicated by a minus sign. Do not roundintermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g.,32.16.)c-2.Calculate the observed risk premium in each year for thelarge-company stocks versus the T-bills. What was the standarddeviation of the risk premium over this period? (Do notround intermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.)