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Youve observed the following returns on Crash-n-Burn Computers stock over the past five years: 13 percent, 13 percent, 20 percent, 25 percent, and 10 percent.
Youve observed the following returns on Crash-n-Burn Computers stock over the past five years: 13 percent, 13 percent, 20 percent, 25 percent, and 10 percent. Suppose the average inflation rate over this period was 3 percent and the average T-bill rate over the period was 3.3 percent. |
a. | What was the average real return on the companys stock? (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 nominal risk premium on the companys stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) |
Average Real Return:__?__%
Average Nominal Risk Premium:__?__%
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