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7.12 Youve observed the following returns on Crash-n-Burn Computers stock over the past five years: 4 percent, -12 percent, 22 percent, 14 percent, and 18

7.12

Youve observed the following returns on Crash-n-Burn Computers stock over the past five years: 4 percent, -12 percent, 22 percent, 14 percent, and 18 percent. The average inflation rate over this period was 3.4 percent and the average T-bill rate was 4.5 percent.

Requirement 1:

What was the average real return on Crash-n-Burns stock? (Do not round intermediate calculations.)

(Click to select)5.33%6.17%12.91%5.89%5.61%

Requirement 2:

What was the average nominal risk premium on Crash-n-Burns stock? (Do not round intermediate calculations.)

(Click to select)4.28%0.56%3.81%3.34%4.70%

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