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. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Year Treasury Bills Inflation 1 10.45%       12.55%         2 11.36            16.00            3 9.06            10.29            4 8.34            7.97            5 8.88            10.29            6 11.23            12.77            7 14.11            16.98            8 15.97            16.90           

Explanation / Answer

Ans

Detail Average Return Remark Treasury Bill 11.18% No trend is found, hence equal weight has been assigned Inflation 12.97% No trend is found, hence equal weight has been assigned

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