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igor_vitrenko [27]
4 years ago
11

You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 16 percent, –5 percent, 19 perc

ent, 13 percent, and 10 percent. Suppose the average inflation rate over this period was 2.2 percent and the average T-bill rate over the period was 5.3 percent. a. What was the average real return on Crash-n-Burn’s stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average real return % b. What was the average nominal risk premium on Crash-n-Burn’s stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) Average nominal risk premium %
Business
1 answer:
Kaylis [27]4 years ago
5 0

Answer:

(A) 8.22%

(B) 7.5%

Explanation:

The first step is to calculate the average nominal return

Average nominal return= R1 + R2 + R3 + R4 + R5/5

= 16 +(-5) + 19 + 13 + 10/5

= 16-5+19+13+10/5

= 53/5

= 10.6%

(A) The average real return can be calculated as follows

= (1 + average nominal return)/(1+ inflation) -1

= (1+ 10.6/100)/(1+2.2/100) -1

= (1+0.106)/(1+0.022)-1

= 1.106/1.022-1

= 1.08219-1

= 0.08219 × 100

= 8.22%

(B) The average nominal risk premium can be calculated as follows

Average risk free rate= Nominal average t-Bill rate-inflation

= 5.3% - 2.2%

= 3.10%

Average nominal risk premium= average nominal return -average risk free rate

= 10.6% - 3.10%

= 7.5%

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Fairview Hospitals has three divisions (service lines). They are General Clinics, Specialty Clinics and Pharmacy Services. The s
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Answer:

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Fixed Expenses B              $510,000        $420,000      $290,000

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3 years ago
Why did the natural environment receive so much attention under new deal programs, and with what result?
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An economic transaction in which one party trades a good or service for another good or services is called barter. comparative a
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barter

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Barter can be regarded as act of trading goods/services involving two or more parties whereby a party provide a goods/services in return for goo/service provided to him/her by another party. It involves system of exchange without using money which means no monetary medium involve. It should be noted that An economic transaction in which one party trades a good or service for another good or services is called barter

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Western Company is preparing a cash budget for June. The company has $10,600 in cash at the beginning of June and anticipates $3
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Answer:

$5,300

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