80.2K

Verified Solution

Link Copied!

Youve observed the following returns on Yamauchi Corporations stock over the past five years: 27.3 percent, 15.2 percent, 33.4 percent, 3.1 percent, and 22.1 percent. The average inflation rate over this period was 3.31 percent and the average T-bill rate over the period was 4.3 percent.
a.	What was the average real risk-free rate over this time period? (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 real risk premium? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Youve observed the following returns on Yamauchi Corporations stock over the past five years: 24.6 percent, 13.4 percent, 29.8 percent, 2.2 percent, and 21.2 percent. The average inflation rate over this period was 3.22 percent and the average T-bill rate over the period was 4.3 percent.
a.	What was the average real return on the stock? (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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer & Explanation Solved by verified expert

See Answer