Problem $1-12$

Assume that the consensus required rate of return on common stocks is $17$ percent. In addition, you read in Fortune that the expected rate of inflation is $4$ percent and the estimated long$-$term real growth rate of the economy is $5$ percent. What interest rate would you expect on U$.$S$.$ government T$-$bills? Round your answer to two decimal places.

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What is the approximate risk premium for common stocks implied by these data? Do not round intermediate calculations. Round your answer to two decimal places.

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