Question
Youve observed the following returns on Crash-n-Burn Computers stock over the past five years: 19 percent, 13 percent, 16 percent, 21 percent, and 10 percent.
Youve observed the following returns on Crash-n-Burn Computers 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 return on Crash-n-Burns stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average real return % b. What was the average nominal risk premium on Crash-n-Burns stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) Average nominal risk premium 6.1 %
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