Suppose we have the following Treasury bill returns and inflation rates over an
ID: 2622923 • Letter: S
Question
Suppose we have the following Treasury bill returns and inflation rates over an eight year period:
Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. (Round your answers to 2 decimal places. (e.g., 32.16))
Calculate the standard deviation of Treasury bill returns and inflation over this period. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
What was the average real return for Treasury bills over this period? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))
Year Treasury Bills Inflation 1 11.11 13.91 2 12.04 16.72 3 9.72 10.97 4 8.98 8.59 5 9.54 10.97 6 11.91 13.47 7 14.81 17.70 8 16.71 17.66Explanation / Answer
a)
Average return Treasury bills% = 11.85%
Average return Inflation%= 13.75%
b)
standard deviation Treasury bills% = 2.70%
standard deviation Inflation%= 3.42%
c
Average real return = -1.65%
Year Treasury Bills Inflation 1 11.11% 13.91% 2 12.04% 16.72% 3 9.72% 10.97% 4 8.98% 8.59% 5 9.54% 10.97% 6 11.91% 13.47% 7 14.81% 17.70% 8 16.71% 17.66% Average 11.85% 13.75% Std Deviation 2.70% 3.42%