Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

You've observed the following returns on Pine Computer's stock over the past five years: 1 7 percent, - 1 5 percent, 1 9 percent, 2

You've observed the following returns on Pine Computer's stock over the past five years:
17 percent, -15 percent, 19 percent, 29 percent, and 10 percent. Suppose the average
inflation rate over this period was 2.6 percent and the average T-bill rate over the period
was 4.3 percent.
a. What was the average real return on the company's 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 company's stock? (Do not round
intermediate calculations and enter your answer as a percent rounded to 1 decimal
place, e.g.,32.1.)
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions