Question: 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: -27.9
![Problem 10-10 Calculating Real Returns and Risk Premiums [LO 1] You've](https://dsd5zvtm8ll6.cloudfront.net/si.experts.images/questions/2024/10/66fd8c739f35d_59566fd8c731549b.jpg)
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: -27.9 percent, 15.6 percent, 34.2 percent, 3.3 percent, and 223 percent. The average inflation rate over this period was 3.33 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
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
