Hi please help with my homework problem I solved A but cannot figure out B Youve observed the following returns on Pine Computers stock over the past five years 12 percent, 9 percent, 20 percent, 17 percent, and 10 percent Suppose the average inflation rate over this period was 3 2 percent and the average T bill rate over the period was 4 9 percent a What was the average real return on the companys stock (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e g , 32 16 ) b What was the average nominal risk premium on the companys stock (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e g , 32 1 ) a Average real return 6 59 b Average nominal risk premium

The Answer is in the image, click to view ...

Question: Hi please help with my homework problem I solved A but cannot figure out B Youve observed the following returns on Pine Computers stock over

Hi please help with my homework problem I solved A but cannot figure out B

Youve observed the following returns on Pine Computers stock over the past five years: 12 percent, 9 percent, 20 percent, 17 percent, and 10 percent. Suppose the average inflation rate over this period was 3.2 percent and the average T-bill rate over the period was 4.9 percent.

a.	What was the average real return on the companys stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b.	What was the average nominal risk premium on the companys stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.)

a. Average real return = 6.59%

b. Average nominal risk premium = ???%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Hi please help with my homework problem I solved A but cannot figure out B Youve observed the following returns on Pine Computers stock over the past five years: 12 percent, 9 percent, 20 percent, 17...

please show work answer question 10 using question 9 and Variability You've observed the following returns on Yasmin the past five years: 19 percent, -13 percent, 7 percent, 25 percent, and 16...

Problem 12-9 Calculating Returns and Variability [LO1] You've observed the following returns on Pine Computer's stock over the past five years: 16 percent, -5 percent, 19 percent, 13 percent, and 10...

You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 12 percent, -12 percent, 19 percent, 24 percent, and 10 percent. What was thee arithmetic average...

Problem 12-10 Calculating Real Returns and Risk Premiums [LO1] You've observed the following returns on Pine Computer's stock over the past five years: 12 percent, 12 percent, 19 percent, 24 percent,...

You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 12 percent, -12 percent, 19 percent, 24 percent, and 10 percent. Suppose the average inflation rate...

Hi, Please help me with homework. Thank you !!! Thumbs up for ALL answers. Material: Book Title Social Media Marketing: A Strategic Approach Author Barker, Barker, Bormann, Roberts, Zahay...

Youve observed the following returns on Pine Computers stock over the past five years: 12 percent, 12 percent, 19 percent, 24 percent, and 10 percent. a.What was the arithmetic average return on the...

You've observed the following returns on Pine Computer's stock over the past five years: 12 percent, -12 percent, 19 percent, 24 percent, and 10 percent. a. What was the arithmetic average return on...

You've observed the following returns on Pine Computer's stock over the past five years: 1 2 percent, - 1 2 percent, 1 9 percent, 2 4 percent, and 1 0 percent. a . What was the arithmetic average...

In this problem, we continue the accounting for Pure Water, Inc. from Chapter 3. On August 1, Pure Water, Inc., expanded its business and began selling and installing swimming pools and spas. The...

84. 1) If B and C are subfields of a field E, then their compositum BVC is the intersection of all the subfields of E containing B and C. Prove that if a1,..., an E E, then F(a1) Vv F(an) =...

Capable Systems is considering a project with a life of 4 years that will require $ 1 6 4 , 8 0 0 for fixed assets and $ 4 2 , 4 0 0 for net working capital. The fixed assets will be depreciated...

What are two businesses that Elon Musk, Inc. divested itself from? Remember that businesses are NOT companies! Do not use any of the items on the list at the end of the exercise. After the business,...

5.33 Tata Motors, Ltd., purchases computer process chips from two suppliers, and the company is concerned about the percentage of defective chips. A review of the records for each supplier indicates...

5.25 An investment portfolio contains stocks of a large number of corporations. Over the last year the rates of return on these corporate stocks followed a normal distribution with mean 12.2% and...

5.26 Southwest Co-op produces bags of fertilizer, and it is concerned about impurity content. It is believed that the weights of impurities per bag are normally distributed with a mean of 12.2 grams...