Problem 12-11 Calculating Real Rates [LO1]

Youve observed the following returns on Crash-n-Burn Computers stock over the past five years: 17 percent, 4 percent, 20 percent, 12 percent, and 10 percent. Suppose the average inflation rate over this period was 2.7 percent and the average T-bill rate over the period was 5.4 percent.

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

Average real risk-free rate

%

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

Average real risk premium

%