Calculate the average return for Treasury bills and the average annual inflation

Question

Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

Calculate the standard deviation of Treasury bill returns and inflation over this time period. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

Calculate the real return for each year. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

What is the average real return for Treasury bills? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percentage
rounded to 2 decimal places (e.g., 32.16).)

Consider the following table for an eight-year period:

Explanation / Answer

  Year

T-bill return

Inflation

Real rate

  Year 1

7.30%

8.70%

-1.29%

  Year 2

8.09%

12.33%

-3.77%

  Year 3

5.88%

6.93%

-0.98%

  Year 4

5.12%

4.87%

0.24%

  Year 5

5.46%

6.69%

-1.15%

  Year 6

7.69%

9.01%

-1.21%

  Year 7

10.57%

13.28%

-2.39%

  Year 8

12.15%

12.51%

-0.32%

Average=

7.78%

9.29%

-1.36%

Standard deviation=

2.49%

3.11%

Where Average = sum of all values/ number of years

Standard deviation =

(the greek letter "mu") is the mean of all our values

xi are individual values

N = total years

Real return = ((1+nominal return)/(1+inflation rate)-1)*100

  Year

T-bill return

Inflation

Real rate

  Year 1

7.30%

8.70%

-1.29%

  Year 2

8.09%

12.33%

-3.77%

  Year 3

5.88%

6.93%

-0.98%

  Year 4

5.12%

4.87%

0.24%

  Year 5

5.46%

6.69%

-1.15%

  Year 6

7.69%

9.01%

-1.21%

  Year 7

10.57%

13.28%

-2.39%

  Year 8

12.15%

12.51%

-0.32%

Average=

7.78%

9.29%

-1.36%

Standard deviation=

2.49%

3.11%

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