1. Using information from the problem below suppose the average inflation rate over this. Was 3.1% and the average T bill rate over the period was 4.1%.
2. A. what was the average real return on the stock?
3. B. what was the average nominal risk premium on the stock?

1. You have observed the following returns on you Yamauchi corporations stock over the past five years: -10%, 24%, 21%, 11%, and 8%.

A. what was the arithmetic average return on the stock over this five year?

B. What was the variance of the returns over this? The standard deviation?

A. Arithmetic average return on the stock over this five-year period: (-10%+24%+21%+11%+8%)/5 = 10.80% B. Variance: = ((-10%-10.80%) ^2+(24%-10.80%) ^2+(21%-10.80%) ^2+(11%-10.80%) ^2+(8%-10.80%) ^2)/ (5-1) =1.7970% Standard Deviation: = (((-10%-10.80%) ^2+(24%-10.80%) ^2+(21%-10.80%) ^2+(11%-10.80%) ^2+(8%-10.80%) ^2) / (5-1)) ^0.5 = 13.41%