Problemyouve observed the following returns on crash-n-burn, Ask an Expert

Accounting

Problem:

You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 14 percent, -9 percent, 16 percent, 21 percent, and 3 percent. Suppose the average inflation rate over this period was 3.5 percent and the average T-bill rate over the period was 4.2 percent.

Required:

Question 1: What was the average real risk-free rate over this time period?

Question 2: What was the average real risk premium?

Note: Show supporting computations in good form.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91173026

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