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Return and Risk of small-company stocks

Carib and Heinekin have reported the returns on small company stocks and U.S. Treasury bills for the period 1986 - 1991 as follows

Year small company stocks u.s treasury bills

1986 6.85% 6.16%
1987 -9.30 5.47
1988 22.87 6.35
1989 10.18 8.37
1990 -21.56 7.81
1991 44.63 5.60

a. Calculate the average returns on small-company stocks and u.s. treasury bills.

b. calculate the variances and standard deviations of the returns on small-company stocks and u.s. treasury bills.

c. compare the returns and risks of these two types of securities.

Solution Summary

The solution calculates average returns, variances and standard deviations of the returns of small-company stocks and U.S. treasury bills and compares the returns and risks of these two types of securities.

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