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Calculate the average real risk premium earned

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Reference no: EM133070526

Question - The following return series comes from Global Financial Data.

Year

Large Stocks

LT Gov Bonds

US T-bills (Rf asset)

CPI (inflation)

1984

31.73%

16.53%

9.90%

3.80%

1985

18.67%

39.03%

7.71%

1.10%

1986

5.25%

32.51%

6.09%

4.43%

1987

16.61%

-8.09%

5.88%

4.20%

1988

31.69%

8.71%

6.94%

4.65%

Part 1) Using the approximate fisher equation, calculate the average real risk premium earned on long-term government bonds.

Part 2) Calculate the average risk premium earned on US T-bills.

Reference no: EM133070526

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