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Calculate the observed risk premium in each year for the

Consider the following rates of return:

Year Large Company Stocks US Treasury Bills

1 3.98% 4.56%

2 14.33 4.92

3 19.17 3.84

4 -14.51 6.98

5 -32.00 5.22

6 37.41 5.36

C. Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the arithmetic average risk premium over this period?

Average Risk Premium 16.34%?

C2. Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the standard deviation of the risk premium over this period?

Standard Deviation 15.67?

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Finance Basics: Calculate the observed risk premium in each year for the

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