Suppose we have the following Treasury bill returns and inflation rates over an
ID: 2736154 • Letter: S
Question
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 for this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Treasury bills 8.66 % Inflation 10.30 % b. Calculate the standard deviation of Treasury bill returns and inflation over this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Treasury bills 2.57 % Inflation 3.23 % c. What was the average real return for Treasury bills over this period? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average real return % ReferenceseBook & Resources average return is not 1.46 please help me
Explanation / Answer
Standard deviation: Standard deviation: Treasury bill returns: Treasury bill: Inflation Years Treasury bill return Inflation a b c=a-b c^2 a b c=a-b c^2 1 8.11 9.83 Years Treasury bill return Average Years Inflation Average 2 8.92 13.36 1 8.11 8.66 -0.55 0.3025 1 9.83 10.3 -0.47 0.2209 3 6.74 7.87 2 8.92 8.66 0.26 0.0676 2 13.36 10.3 3.06 9.3636 4 5.88 5.61 3 6.74 8.66 -1.92 3.6864 3 7.87 10.3 -2.43 5.9049 5 6.32 7.63 4 5.88 8.66 -2.78 7.7284 4 5.61 10.3 -4.69 21.9961 6 8.57 10.01 5 6.32 8.66 -2.34 5.4756 5 7.63 10.3 -2.67 7.1289 7 11.55 14.32 6 8.57 8.66 -0.09 0.0081 6 10.01 10.3 -0.29 0.0841 8 13.21 13.77 7 11.55 8.66 2.89 8.3521 7 14.32 10.3 4.02 16.1604 8 13.21 8.66 4.55 20.7025 8 13.77 10.3 3.47 12.0409 Total 69.3 82.4 Variance 46.32 Variance 72.90 Average 69.3/8 82.4/8 Average 5.79 Average 9.11 = 8.66 10.30 Standrd deviation is the sqare root of variance. Standrd deviation is the sqare root of variance. Thus, standard deviation 2.41 Thus, standard deviation 3.02 Treasury bill return Inflation a. Average rate 8.66 10.30 b. Standard deviation 2.41 3.02