You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 3 percent, -10 percent, 28 percent, 19 percent, and 17 percent. The average inflation rate over this period was 3.4 percent and the average T-bill rate was 3.95 percent.
Requirement 1:
What was the average real return on Crash-n-Burn’s stock? (Do not round intermediate calculations.)
8.51% 8.12% 7.35% 15.19% 7.74%
Requirement 2:
What was the average nominal risk premium on Crash-n-Burn’s stock? (Do not round intermediate calculations.)
6.78% 0.77% 7.45% 5.29% 6.03%