Answer :
(a.) Calculation of Average Real Risk free rate :
Average Return = Sum of Returns / Number of Years
= [17% - 15% + 19% + 29% + 10%] / 5
= 60% / 5
= 12% or 0.12
Average Real Risk free Rate = [(1 + Average Return) / (1 + Inflation Rate)] - 1
= [(1 + 0.12) / (1 + 0.026)] - 1
= 1.09161793372 - 1
= 9.16%
(b.) Average Risk Premium = Average Real Risk free Rate - Risk Free Rate
= 9.16% - 4.3%
= 4.86%
You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 17 percent,...
You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 16 percent, -16 percent, 18 percent, 28 percent, and 10 percent. Suppose the average inflation rate over this period was 2.1 percent and the average T-bill rate over the period was 4.2 percent. a. What was the average real return on the company's 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...
You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 8 percent, -15 percent, 19 percent, 31 percent, and 21 percent. Suppose the average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 3.9 percent. a. What was the average real return 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.) What was the...
You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 8 percent, -15 percent, 19 percent, 31 percent, and 21 percent. Suppose the average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 3.9 percent. a. What was the average real return 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...
You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 8 percent, -15 percent, 19 percent, 31 percent, and 21 percent. Suppose the average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 3.9 percent. a. What was the average real return 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...
You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 8 percent, -15 percent, 19 percent, 31 percent, and 21 percent. Suppose the average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 3.9 percent. a. What was the average real return 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...
2 Homework You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 18 percent. -14 percent, 20 percent, 22 percent, and 10 percent. Suppose the average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 4.4 percent. 6. What was the average real return on the company's stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b....
You've observed the following returns on Crashen-Burn Computer's stock over the past five years 12 percent, -12 percent, 19 percent, 24 percent, and 10 percent. Suppose the average inflation rate over this period was 2.5 percent and the average T-bill rate over the period was 3.2 percent a. What was the average real return on Crash-n-Burn's stock? (Do not found intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average real return b. What...
You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 17 percent, -4 percent, 20 percent, 12 percent, and 10 percent. a. What was the arithmetic average return on the company's stock over this five-year period? (Do not round Intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) b-1. What was the variance of the company's returns over this period? (Do not round intermediate calculations and round your answer...
You've observed the following returns on Crash-n- Burn Computer's stock over the past five years: 8 percent, -15 percent, 19 percent, 31 percent, and 21 percent. a. What was the arithmetic average return on the company's stock over this five-year 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 variance of the company's returns 1. over this period? (Do not round intermediate calculations and round...
You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 14 percent, –14 percent, 16 percent, 26 percent, and 10 percent. Suppose the average inflation rate over this period was 3.5 percent and the average T-bill rate over the period was 4 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...