Consider the following table for a period of six years: Returns Year Large-Company Stocks U.S. Treasury Bills 1 –14.89 % 7.33 % 2 –26.53 8.01 3 37.27 5.91 4 23.97 5.27 5 –7.24 5.47 6 6.61 7.70 Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Arithmetic average returns Large-company stock % T-bills % Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation Large-company stock % T-bills % Calculate the observed risk premium in each year for the large-company stocks versus the T-bills.
a. What was the arithmetic average risk premium over this period? (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.) Average risk premium %
b. What was the standard deviation of the risk premium over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Risk premium standard deviation %