You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 2 percent, -12 percent, 23 percent, 16 percent, and 17 percent. The average inflation rate over this period was 3.6 percent and the average T-bill rate was 4.25 percent.
1. What was the average real return on Crash-n-Burn’s stock? (Do not round intermediate calculations.)
2. What was the average nominal risk premium on Crash-n-Burn’s stock? (Do not round intermediate calculations.)