Suppose we have the following Treasury bill returns and inflation rates over an

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 7.96            9.57            2 8.76            13.22            3 6.59            7.71            4 5.74            5.48            5 6.17            7.47            6 8.41            9.84            7 11.38            14.14            8 13.02            13.56           

Explanation / Answer

Treasury Bills Inflation a 8.50 10.12 b 2.56 3.21 c Real return Year ={(1+Return)/(1+inflation)}-1 1 -1.47 2 -3.94 3 -1.04 4 0.25 5 -1.21 6 -1.30 7 -2.42 8 -0.48 Average real return -1.45

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