Question
In: Finance
Consider the following table for an eight-year period: Year T-bill return Inflation Year 1 7.36% ...
| Consider the following table for an eight-year period: |
| Year | T-bill return | Inflation |
| Year 1 | 7.36% | 8.64% |
| Year 2 | 8.39 | 12.27 |
| Year 3 | 5.94 | 6.87 |
| Year 4 | 5.42 | 4.93 |
| Year 5 | 5.52 | 6.63 |
| Year 6 | 7.99 | 8.95 |
| Year 7 | 10.63 | 13.22 |
| Year 8 | 12.45 | 12.45 |
| Requirement 1: |
|
Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) |
| Average return for Treasury bills | % |
| Average annual inflation rate | % |
| Requirement 2: |
|
Calculate the standard deviation of Treasury bill returns and inflation over this time period. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) |
| Standard deviation of Treasury bills | % |
| Standard deviation of inflation | % |
| Requirement 3: |
| (a) |
Calculate the real return for each year. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) |
| Year | Real return |
| Year 1 | % |
| Year 2 | % |
| Year 3 | % |
| Year 4 | % |
| Year 5 | % |
| Year 6 | % |
| Year 7 | % |
| Year 8 | % |
| (b) |
What is the average real return for Treasury bills?
(Negative amount should be indicated by a minus
sign. Do not round intermediate calculations.
Enter your answer as a percentage |
| Average real return for Treasury bills | % |
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Consider the following table for an eight-year period: Year T-bill return Inflation 1 7.31 % 8.69...
Consider the following table for an eight-year period:
Year
T-bill return
Inflation
1
7.31
%
8.69
%
2
8.14
12.32
3
5.89
6.92
4
5.17
4.88
5
5.47
6.68
6
7.74
9.00
7
10.58
13.27
8
12.20
12.50
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...
Consider the following table for an eight-year period: Year T-bill return Inflation 1 7.40 % 8.60...
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...
Year T-bill return Inflation 1 7.36% 8.64% 2 8.39 12.27
Year
T-bill return
Inflation
1
7.36%
8.64%
2
8.39
12.27
3
5.94
6.87
4
5.42
4.93
5
5.52
6.63
6
7.99
8.95
7
10.63
13.22
8
12.45
12.45
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.)
Suppose we have the following Treasury bill returns and inflation rates over an eight-year period: Year...
Suppose we have the following Treasury bill returns and
inflation rates over an eight-year period:
Year
Treasury Bills
Inflation
1
8.11%
9.83%
2
8.92
13.36
3
6.74
7.87
4
5.88
5.61
5
6.32
7.63
6
8.57
10.01
7
11.55
14.32
8
13.21
13.77
a.
Calculate the average return for Treasury bills and the average
annual inflation rate...
Suppose we have the following Treasury bill returns and inflation rates over an eight year period:...
Suppose we have the following Treasury bill returns and
inflation rates over an eight year period:
Year
Treasury
Bills
Inflation
1
9.23%
11.07%
2
10.10
14.66
3
7.84
9.03
4
6.92
6.59
5
7.42
8.79
6
9.73
11.23
7
12.57
15.40
8
14.35
15.20
a.
Calculate the average return for Treasury bills and the average
annual inflation...
Suppose we have the following Treasury bill returns and inflation rates over an eight year period:...
Suppose we have the following Treasury bill returns and
inflation rates over an eight year period:
Year
Treasury
Bills
Inflation
1
7.37%
8.79%
2
8.07
12.42
3
5.95
7.02
4
5.15
4.94
5
5.53
6.78
6
7.72
9.10
7
10.64
13.37
8
12.18
12.60
Calculate the standard deviation of Treasury bill returns and
inflation over this period. (Do...
Consider a T-Bill with a rate of return of 2% and the following risky secuirties: Security...
Consider a T-Bill with a rate of return of 2% and the following
risky secuirties:
Security A: E(r) = .14 Variance = .07
Security B: E(r) = .11 Variance = .05
Security C: E(r) = .09 Variance = .02
Security D: E(r) = .13 Variance = .06
The investors must develop a complete portfolio by combing the
risk-free asset with one of the securities mentioned above. The
security the investor should chose as part of his complete
portfolio to achieve...
Consider the following rates of return: Year / Large Company Stocks / US Treasury Bill 1...
Consider the following rates of return: Year / Large Company
Stocks / US Treasury Bill 1 3.99 % 4.59 % 2 14.16 4.94 3 19.25 3.86
4 –14.43 6.99 5 –31.92 5.30 6 37.49 6.20 a. Calculate the
arithmetic average returns for large-company stocks and T-bills
over this period. b. Calculate the standard deviation of the
returns for large-company stocks and T-bills over this period. c-1
Calculate the observed risk premium in each year for the
large-company stocks versus the...
1) A ten-year T-bond has an eight percent coupon, and an eight-year T-bond has a ten...
1) A ten-year T-bond has an eight percent coupon, and an
eight-year T-bond has a ten percent coupon. These bonds are not
callable and both have the same risk. If the yield to maturity
(required rate of return) of both bonds increases by the same
amount, which of the following statements would be CORRECT?
a) The prices of both bonds will decrease by the same
amount.
b) The prices of both bonds would increase by the same
amount.
c) Both...
1-The real interest rate is 0.21%, a 1-year T-Bill rate is 1.09% and the 2 year T-Note rate is 1.36% with no MRP. What is the inflation expected the year after next?
1-The real interest rate is 0.21%, a 1-year T-Bill rate is 1.09% and the 2 year T-Note rate is 1.36% with no MRP. What is the inflation expected the year after next?
2-If you purchase a 20-year T-bond, which of the following sources of risk are you most concerned about?
A)The possibility that you will not be able to resell the T-bond.
B)The possibility that the bond's MRP will be zero
C)The possibility that the issuer will default on...
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