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Return and Risk of small-company stocks

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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.

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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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