Question
You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 8 percent, -15 percent, 19 percent, 38 percent, and 10 percent.
You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 8 percent, -15 percent, 19 percent, 38 percent, and 10 percent. Suppose the average inflation rate over this period was 3.59 percent and the average T-bill rate over the period was 3.99 percent. What was the average real risk premium over this time period?
[Hint: Step 1: Calculate the average real rate of return for Crash-n-Burn Computer. Step 2: Calculate the average real rate of return for the T-bill. Step 3: Subtract (average real rate of return for Crash-n-Burn Computer) - (average real rate of return for the T-bill).
(Enter your answer as a percentage, omit the "%" sign in your response, and round your answer to 2 decimal places. For example, 0.12345 or 12.345% should be entered as 12.35)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started