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You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 11 percent,...

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Finance

You’ve observed the following returns on Crash-n-Burn Computer’sstock over the past five years: 11 percent, –10 percent, 19percent, 18 percent, and 10 percent. Suppose the average inflationrate over this period was 2.7 percent and the average T-bill rateover the period was 4.8 percent. a. What was the average realrisk-free rate over this time period? (Do not round intermediatecalculations and enter your answer as a percent rounded to 2decimal places, e.g., 32.16.) b. What was the average real riskpremium? (Do not round intermediate calculations and enter youranswer as a percent rounded to 2 decimal places, e.g., 32.16.)

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