Consider the following table for a period of six years: Returns Year Large-Company Stocks U.S. Treasury Bills 1 –15.99 % 7.55 % 2 –26.86 8.12 3 37.49 6.13 4 24.19 6.37 5 –7.68 5.58 6 6.83 8.03

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.)

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.)