You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 7 percent, -12 percent, 11 percent, 38 percent, and 14 percent.
Required:
a. The arithmetic average return on Crash-n-Burn's stock over this five year period was 11.6 percent.
b. Suppose the average inflation rate over this time period was 3.5 percent and the average T-bill rate over the period was 4.2 percent. The average real return on Crash-n-Burn's stock was ____percent and the average nominal risk premium on Crash-n-Burn's stock was ____percent.