You've observed the following returns on Pine Computer's stock over the past five years: 8 percent, -12 percent, 14 percent, 21 percent, and 16 percent. The average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 4.1 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.
You've observed the following returns on Pine Computer's stock over the past five years: 8 percent, -12 percent, 14 percent, 21 percent, and 16 percent. The average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 4.1 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.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Masukh
![You've observed the following returns on Pine Computer's stock over the past five years: 8 percent, -12 percent, 14 percent, 21
percent, and 16 percent. The average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 4.1
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.
a. Average real return
b. Average nominal risk premium
%
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F98dddf02-448a-4bf6-bd22-5e16df6acc72%2Fd9a558e0-49bc-4992-9b75-06a90c2d2094%2Fciydhe_processed.jpeg&w=3840&q=75)
Transcribed Image Text:You've observed the following returns on Pine Computer's stock over the past five years: 8 percent, -12 percent, 14 percent, 21
percent, and 16 percent. The average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 4.1
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.
a. Average real return
b. Average nominal risk premium
%
%
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