Question: please explain and show work. thanks ! Problem 10-10 Calculating Real Returns and Risk Premiums [LO 1] You've observed the following returns on Pine Computer's
Problem 10-10 Calculating Real Returns and Risk Premiums [LO 1] You've observed the following returns on Pine Computer's stock over the past five years: -25.2 percent, 13.8 percent, 30.6 percent, 2.4 percent, and 21.4 percent. The average inflation rate over this period was 3.24 percent and the average T-bill rate over the period was 4.3 percent. a. What was the average real return on the stock? Note: 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 stock? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16
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