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: -26.7 percent, 14.8 percent, 32.6 percent, 2.9 percent, and 21.9 percent. The average inflation rate over this period was 3.29 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? 32.16. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., a. Average real return b. Average nominal risk premium 7.09 % 6.35 %

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: -267 percent, 14.8 percent, 32.6 percent, 29 percent, and 21.9 percent. The average inflation rate over this period was 3.29 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 onswer os a percent rounded to 2 decimal places, e.g., 3216. b. What was the average nominal risk premium on the stock? Note: Do not round intermediate calculations and enter your answer os a percent rounded to 2 decimal places, e.g., 32.16