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You've observed the following returns on SkyNet Data Corporation's stock over the past five years: 14 percent, -14 percent, 16 percent, 26 percent, and 10
You've observed the following returns on SkyNet Data Corporation's stock over the past five years: 14 percent, -14 percent, 16 percent, 26 percent, and 10 percent. Suppose the average inflation rate over this period was 3.5 percent and the average T-bill rate over the period was 4 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.) Answer is complete but not entirely correct. a. 4.83 % Average real return Average nominal risk b. 6.2 %
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