You’ve observed the following returns on Crash-n-Burn

You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 3 percent, –9 percent, 30 percent, 19 percent, and 18 percent. The average inflation rate over this period was 3.5 percent and the average T-bill rate was 4.8 percent.

 

What was the average real return on the company’s stock?

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8.41%

 

What was the average nominal risk premium on the company’s stock?

7.4%