You've observed the following nominal returns on Crash-n-Burn Computer's stock over the past five years: 4...
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You've observed the following "nominal" returns on Crash-n-Burn Computer's stock over the past five years: 4 percent, -12 percent, 29 percent, 14 percent, and 16 percent. The average inflation rate over this period was 3.4 percent and the average T-bill rate was 4.9 percent. Requirement 1: What was the average "real" return on Crash-n-Burn's stock? Note: Use the Fisher Effect Formula from the Bond chapter to convert nominal to real rates of return. (Do not round intermediate calculations.) (Click to select) Requirement 2: What was the average nominal risk premium on Crash-n-Burn's stock? (Do not round intermediate calculations.) (Click to select) You've observed the following "nominal" returns on Crash-n-Burn Computer's stock over the past five years: 4 percent, -12 percent, 29 percent, 14 percent, and 16 percent. The average inflation rate over this period was 3.4 percent and the average T-bill rate was 4.9 percent. Requirement 1: What was the average "real" return on Crash-n-Burn's stock? Note: Use the Fisher Effect Formula from the Bond chapter to convert nominal to real rates of return. (Do not round intermediate calculations.) (Click to select) Requirement 2: What was the average nominal risk premium on Crash-n-Burn's stock? (Do not round intermediate calculations.) (Click to select)
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To calculate the average real return on CrashnBurn Computers stock using the Fisher Effect formula w... View the full answer
Related Book For
Fundamentals of corporate finance
ISBN: 978-0073382395
9th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
Posted Date:
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