Problem $12-11$ Calculating Real Rates $[$LO$1]$

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 over this period was $2\mathrm{.}5$ percent and the average T$-$bill rate over

the period was $3\mathrm{.}2$ percent.

a$.$ What was the average real risk$-$free rate over this time period? $($Do not round

intermediate calculations and enter your answer as a percent rounded to $2$ decimal

places, e$.$g$.,32\mathrm{.}16.)$

b$.$ What was the average real risk premium? $($Do not round intermediate calculations

and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$