Question: For Problem 9, suppose the average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 4.1 percent.

For Problem 9, suppose the average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 4.1 percent.
a. What was the average real return on the stock?
b. What was the average nominal risk premium on the stock?

Problem 9

You’ve observed the following returns on Yamauchi Corporation’s stock over the past five years: -10 percent, 24 percent, 21 percent, 11 percent, and 8 percent.

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