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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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