Question
Consider the following table for the period from 1973 through 1980. Year T-bill return Inflation 1973 7.29% 8.71% 1974 7.99 12.34 1975 5.87 6.94 1976
Consider the following table for the period from 1973 through 1980. |
Year | T-bill return | Inflation |
1973 | 7.29% | 8.71% |
1974 | 7.99 | 12.34 |
1975 | 5.87 | 6.94 |
1976 | 5.07 | 4.86 |
1977 | 5.45 | 6.70 |
1978 | 7.64 | 9.02 |
1979 | 10.56 | 13.29 |
1980 | 12.10 | 12.52 |
Requirement 1: |
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).) |
Average return for Treasury bills | % |
Average annual inflation rate | % |
Requirement 2: |
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).) |
Standard deviation of Treasury bills | % |
Standard deviation of inflation | % |
Requirement 3: |
(a) | Calculate the real return for each year. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16). Negative amounts should be indicated by a minus sign.) |
Year | Real return |
1973 | % |
1974 | % |
1975 | % |
1976 | % |
1977 | % |
1978 | % |
1979 | % |
1980 | % |
(b) | What is the average real return for Treasury bills? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16). Negative amount should be indicated by a minus sign.) |
Average real return for Treasury bills | % |
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