Cor hec FINANCE CH 12 Question 6 (of 7 6 value 10.00 points Suppose we have the

ID: 2807144 • Letter: C

Question

Cor hec FINANCE CH 12 Question 6 (of 7 6 value 10.00 points Suppose we have the following Treasury bill eturns and inflation rates over an eight year period Inflation 10.40 13.96 8.39 6.04 8.15 10.56 14.70 14.33 Year Treasury Bills 862 9.46 7.23 6.34 6.81 9.09 11.90 13.62 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 Inflation 9131% 10 82% 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)) 2531% Treasury bills Inflation 3.241 % c. What was the average real return for Treasury bills over this peniod? (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

treasury bill return

inflation rate

real rate of return = nominal rate of return - inflation rate

8.62

10.4

-1.78

9.46

13.96

-4.5

7.23

8.39

-1.16

6.34

6.04

0.3

6.81

8.15

-1.34

9.09

10.56

-1.47

11.9

14.7

-2.8

13.62

14.33

-0.71

sum of real real rate of return

-13.46

no of years

Average real return

sum of real rate of return/no of years

-1.68