Question

Consider the following table for an eight-year period:

Year	T-bill return		Inflation
1	7.40	%	8.60	%
2	8.59		12.23
3	5.98		6.83
4	5.62		4.97
5	5.56		6.59
6	8.19		8.91
7	10.67		13.18
8	12.65		12.41

Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Average return for Treasury bills	%
Average annual inflation rate	%

Calculate the standard deviation of Treasury bill returns and inflation over this time period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Standard deviation of Treasury bills	%
Standard deviation of inflation	%

Calculate the real return for each year. (A negative answer should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Year	Real return
1	%
2	%
3	%
4	%
5	%
6	%
7	%
8	%

What is the average real return for Treasury bills? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Average real return for Treasury bills             %

Answer 1