You've observed the following returns on Yamauchi Corporation's stock over the pastfive years: -27.9 percent, 15.6 percent, 34.2 percent, 3.3 percent, and 22.3 percent. Theaverage inflation rate over this period was 3.33 percent and the average T-bill rate overthe period was 4.3 percent.a. What was the average real risk-free rate over this time period? (Do not roundintermediate calculations and enter your answer as a percent rounded to 2 decimalplaces, e.g., 32.16.)b. What was the average real risk premium? (Do not round intermediate calculationsand enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)a.b.X Answer is complete but not entirely correct.Average real risk-free rateAverage real risk premium0.94 %8.48 X %

Calculate the average nominal rate by dividing the sum of the rate by the number of rates Average…

Answered: b. What was the average real risk…

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.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

You've observed the following returns on Yamauchi Corporation's stock over the past
five years: -27.9 percent, 15.6 percent, 34.2 percent, 3.3 percent, and 22.3 percent. The
average inflation rate over this period was 3.33 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.)
a.
b.
X Answer is complete but not entirely correct.
Average real risk-free rate
Average real risk premium
0.94 %
8.48 X %

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