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Problem 10-10 Calculating Real Returns and Risk Premiums [LO 1] You've observed the following returns on Yamauchi Corporation's stock over the past five years: -25.8
Problem 10-10 Calculating Real Returns and Risk Premiums [LO 1] You've observed the following returns on Yamauchi Corporation's stock over the past five years: -25.8 percent, 14.2 percent, 31.4 percent, 2.6 percent, and 21.6 percent. The average inflation rate over this period was 3.26 percent and the average T-bill rate over the period was 4.3 percent. a. What was the average real return on the stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What was the average nominal risk premium on the stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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