I just need help with part c. The answers in part a and b have been verified as

Question

I just need help with part c. The answers in part a and b have been verified as correct.

Suppose we have the following Treasury bill returns and inflation rates over an eight year period:

Year Treasury Bills Inflation
1 11.47            14.07           
2 12.41            17.11           
3 10.08            11.34           
4 9.33            8.93           
5 9.90            11.34           
6 12.28            13.85           
7 15.19            18.09           
8 17.11            18.07           

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a. 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))

   
Treasury bills %   12.22
Inflation %   14.10

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b. 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))

   
Treasury bills %   2.72
Inflation %   3.44

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    c. 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))

Average real return %

Explanation / Answer

Real Return: return on treasury bills-inflation

Average Real Return=(-2.6-4.7-1.26+0.4-1.44-1.57-2.9-0.96)/5=-1.88%

year Treasury Bills Inflation Real Return 1 11.47 14.07 -2.6 2 12.41 17.11 -4.7 3 10.08 11.34 -1.26 4 9.33 8.93 0.4 5 9.9 11.34 -1.44 6 12.28 13.85 -1.57 7 15.19 18.09 -2.9 8 17.11 18.07 -0.96

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