You’ve observed the following returns on Doyscher Corporation’s stock over the past five years: –28.8 percent, 16.2 percent, 35.4 percent, 3.6 percent, and 22.6 percent. The average inflation rate over this period was 3.36 percent and the average T-bill rate over the period was 4.3 percent.
1. What was the average real return on the stock?
2. What was the average nominal risk premium on the stock?