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
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
Chapter2: The Domestic And International Financial Marketplace
Section: Chapter Questions
Problem 1P
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Fundamentals of Financial Management, Concise Edi…
Finance
ISBN:
9781285065137
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Fundamentals of Financial Management, Concise Edi…
Finance
ISBN:
9781305635937
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Fundamentals of Financial Management, Concise Edi…
Finance
ISBN:
9781285065137
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Fundamentals of Financial Management, Concise Edi…
Finance
ISBN:
9781305635937
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning