Suppose we have the following returns for large-company stocks and Treasury bills over a six year period:
Year Large Company US Treasury Bill
1 3.89 5.81
2 14.14 2.47
3 19.13 3.7
4 -14.55 7.13
5 -32.04 5.18
6 37.37 6.16
Required:
a. Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the average risk premium over this period?
b. Calculate the arithmetic average returns for large-company stocks and T-bills over this period.
c. Calculate the standard deviation of the returns for large-company stocks and T-bills over this period.
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Ответ:
To determine proper allocation of resources since the business is relatively new.
Explanation:
Remember, by using the monthly forcasting method in the first year of operations, it allows for total monthly expenses to be weighed against the total monthly revenue.
However, after gathering some experience from the first year's operations, using the quarterly method would allow for easy comparism of the performance of preceding years. ,