Question: Problem 12-10 Calculating Real Returns and Risk Premiums [LO1] -22 You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 15

 Problem 12-10 Calculating Real Returns and Risk Premiums [LO1] -22 You've

Problem 12-10 Calculating Real Returns and Risk Premiums [LO1] -22 You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 15 percent. -15 percent, 17 percent, 27 percent, and 10 percent. Suppose the average inflation rate over this period was 16 percent and the average T-bill rate over the period was 4.1 percent. a. What was the average real return on the company's stock? (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 company's stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g. 3241.) & Answer is complete but not entirely correct. a. 10.80 % Average real return Average nominal risk premium b. 8.3 %

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