Question
Youve observed the following returns on Bennington Corporations stock over the past five years: 19 percent, 13 percent, 16 percent, 21 percent, and 10 percent.
Youve observed the following returns on Bennington Corporations stock over the past five years: 19 percent, 13 percent, 16 percent, 21 percent, and 10 percent. Suppose the average inflation rate over this period was 1.4 percent and the average T-bill rate over the period was 4.5 percent. a. What was the average real risk-free rate over this time period? (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 real risk premium? (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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