You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 3 percent, -13 percent, 28 percent, 20 percent, and 16 percent. The average inflation rate over this period was 3 percent and the average T-bill rate was 5.05 percent.
Requirement 1:
What was the average real return on Crash-n-Burn’s stock? (Do not round intermediate calculations.)
7.19% 8.33% 7.57% 7.95% 14.12%
Requirement 2:
What was the average nominal risk premium on Crash-n-Burn’s stock? (Do not round intermediate calculations.)
5.70% 0.76% 5.23% 4.66% 4.08%