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You've observed the following nominal returns on Crash-n-Burn Computer's stock over the past five years: 5 percent, -15 percent, 30 percent, 21 percent, and 12
You've observed the following "nominal" returns on Crash-n-Burn Computer's stock over the past five years: 5 percent, -15 percent, 30 percent, 21 percent, and 12 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-Burn's 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-Burn's stock? (Do not round intermediate calculations.) Click to select)Y
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