Question: How you get right answer for Part B? You've observed the following returns on Pine Computer's stock over the past five years: 20 percent, -12
You've observed the following returns on Pine Computer's stock over the past five years: 20 percent, -12 percent, 17 percent, 20 percent, and 10 percent. Suppose the average inflation rate over this period was 1.7 percent and the average T-bill rate over the period was 4.6 percent. a. What was the average real return on the company's 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 company's stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) Answer is complete but not entirely correct. a. Average real return b. Average nominal risk premium 9.14% % 0.1
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