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: -28.5
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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: -28.5 percent, 16 percent, 35 percent, 3.5 percent, and 22.5 percent. The average inflation rate over this period was 3.35 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 . Answer is complete but not entirely correct
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