You've Observed the Following Returns on Crash-N-Burn Computer's Stock Over

question 92

Multiple Choice

You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 3 percent,-10 percent,24 percent,22 percent,and 12 percent.Suppose the average inflation rate over this time period was 3.6 percent and the average T-bill rate was 4.8 percent.Based on this information,what was the average nominal risk premium?

• A)5.15 percent
• B)5.40 percent
• C)6.01 percent
• D)6.37 percent
• E)6.60 percent

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Definitions:

General Ledger

The master set of accounts that summarize all transactions occurring within an entity, serving as the main source for financial reporting.

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance, according to the rules of double-entry accounting.

Debit

An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet.

Credit

An arrangement whereby goods, services, or money is received in exchange for a promise to pay back a definite sum of money at a future date.