In: Finance
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 | % |