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Average Nominal Risk and Average Real Return

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You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 10 percent, -11 percent, 18 percent, 19 percent, and 10 percent. Suppose the average inflation rate over this period was 2.2 percent and the average T-bill rate over the period was 4.7 percent.

a.
What was the average real return on Crash-n-Burn's stock? (Round your answer to 2 decimal places. (e.g., 32.16))

Average real return %

b.
What was the average nominal risk premium on Crash-n-Burn's stock? (Round your answer to 1 decimal place. (e.g., 32.1))

Average nominal risk %

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Solution Summary

The solution gives detailed steps on computing the average real return and average nominal risk. All formula and calculations are shown and explained.

$2.19