Calculating Real Returns and Risk Premiums In Problem 15, suppose the average inflation rate over this period was 4.2 per cent and the average T-bill rate over the period was 5.1 per cent.

(a) What was the average real return on British Auto’s shares?

(b) What was the average nominal risk premium on British Auto’s shares?

(c) What was the average real risk-free rate over this time period? What was the average real risk premium?