You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 14 percent, –9 percent, 16 percent, 21 percent, and 3 percent. Suppose the average inflation rate over this period was 3.5 percent and the average T-bill rate over the period was 4.2 percent.
a. What was the average real return on Crash-n-Burn’s stock? (Round your answer to 2 decimal places. (e.g., 32.16))
Average real return %
b. What was the average nominal risk premium on Crash-n-Burn’s stock? (Round your answer to 1 decimal place. (e.g., 32.1))
Average nominal risk %