Youve observed the following "nominal" returns on Crash-n-Burn Computers stock over the past five years: 2 percent, -11 percent, 23 percent, 16 percent, and 16 percent. The average inflation rate over this period was 3.4 percent and the average T-bill rate was 5.35 percent.

Requirement 1:

What was the average "real" return on Crash-n-Burns stock? Note: Use the Fisher Effect Formula from the Bond chapter to convert nominal to real rates of return. (Do not round intermediate calculations.)

Requirement 2:

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