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  3. 1) a stock has a beta of 1.30, the expected return

1) A stock has a beta of 1.30, the expected return on the market is...

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Accounting

1) A stock has a beta of 1.30, the expected return on the market is 10 percent, and the risk-free rate is 4.6 percent. What must the expected return on this stock be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Expected return

%

2) Youve observed the following returns on Crash-n-Burn Computers stock over the past five years: 17 percent, 15 percent, 19 percent, 29 percent, and 10 percent. Suppose the average inflation rate over this period was 2.6 percent and the average T-bill rate over the period was 4.3 percent.

a.

What was the average real return on Crash-n-Burns stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Average real return

%

b.

What was the average nominal risk premium on Crash-n-Burns stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.)

Average nominal risk premium

%

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