You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 5 percent, -11 percent, 25 percent, 18 percent, and 14 percent. The average inflation rate over this period was 3.8 percent and the average T-bill rate was 5.8 percent.
Requirement 1: What was the average real return on Crash-n-Burn’s stock? (Do not round intermediate calculations.)
Requirement 2: What was the average nominal risk premium on Crash-n-Burn’s stock? (Do not round intermediate calculations.)