Calculating Real Rates
You’ve observed the following returns on Doyscher Corporation’s stock over the past five years: –24.9 percent, 13.6 percent, 30.2 percent, 2.3 percent, and 21.3 percent. The average inflation rate over this period was 3.23 percent and the average T-bill rate over the period was 4.3 percent.
Requirement 1:
What was the average real risk-free rate over this time period? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Average real risk-free rate %
Requirement 2:
What was the average real risk premium? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Average real risk premium %