FINANCE Chapter 12 &13 Assignment Question 3 (of 15) 3. 10.00 points You\'ve obs

Question

FINANCE Chapter 12 &13 Assignment Question 3 (of 15) 3. 10.00 points You've observed the following returns on Crash-n-Bum Computer's stock over the past five years: 3 percent, -9 percent, 29 percent, 17 percent, and 12 percent. The average inflation rate over this period was 3.1 percent and the average T-bill rate was 3.6 percent Requirement 1: What was the average real returm on Crash-n-Bun's stock? (Do not round intermediate calculations.) Ccick to select) B What was the average nominal risk premium on Crash-n-Burn's stock? (Do not round intermediate Click to select) eBook & Resources MacBook Air 2 4 8

Explanation / Answer

Average real return equals -9-3.1 , 29-3.1 , 17-3.1 , 12-3.1 = -12.1+25.9+13.9+8.9=36.6

=36.6/4= 9.15

To find out average real return reduce the inflation rate from return on stock

b. Average t bill is equal to average nominal rate of return = 3.6 %

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.