Consider the following table for the period from 1973 through 1980.

Year

T-bill return

Inflation

1973

6.93%

8.80%

1974

8.00

12.20

1975

5.80

7.01

1976

5.08

4.81

1977

5.12

6.77

1978

7.18

9.03

1979

10.38

13.31

1980

11.24

12.40

1. Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period.

Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.

1. Calculate the standard deviation of Treasury bill returns and inflation over this time period.

Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.

1. Calculate the real return for each year.

Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.

1. What is the average real return for Treasury bills?

Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

a. Average return for Treasury bills

%

a. Average annual inflation rate

%

b. Standard deviation of Treasury bills

%