Problem 10-11 Calculating Real Rates [LO 1]

Youve observed the following returns on Doyscher Corporations stock over the past five years: 27.9 percent, 15.6 percent, 34.2 percent, 3.3 percent, and 22.3 percent. The average inflation rate over this period was 3.33 percent and the average T-bill rate over the period was 4.3 percent.

Requirement 1:

What was the average real risk-free rate over this time period? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Average real risk-free rate

%

Requirement 2:

What was the average real risk premium? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Average real risk premium

%