Background -

9. Calculating Returns and Variability [LO1] Youve observed the following returns on Pine Computers stock over the past five years: 8 percent, 12 percent, 14 percent, 21 percent, and 16 percent. What was the arithmetic average return on the companys stock over this five-year period? What was the variance of the companys returns over this period? The standard deviation?

10. Calculating Real Returns and Risk Premiums [LO1] For Problem 9, suppose the average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 3.9 percent. What was the average real return on the companys stock? What was the average nominal risk premium on the companys stock?

ACTUAL QUESTION TO SOLVE -> 11. Calculating Real Rates [LO1] Given the information in Problem 10, what was the average real risk-free rate over this time period? What was the average real risk premium?