Refer to the following table: Year T-bill return Inflation 1973 7.29% 8.71% 1974

Question

Refer to the following table:

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

A.
Requirement 1:
Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))


Average Treasury bill return ??? percent
Average inflation ???? percent

B.
Requirement 2:
Calculate the standard deviation of Treasury bill returns and inflation over this period. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))

Standard deviation
T-bills ??? percent
Inflation ??? percent

C.

Requirement 3:
Calculate the average real return for Treasury bills over this period.(Do not include the percent sign (%). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))

Average real return ??? percent

Explanation / Answer

A. Requirement 1: Average Treasury bill return 7.746% Average inflation 9.2975% B. Requirement 2: Standard deviation (note not sure if this is a sample or population, will provide both the SD, please check whichever is required.) T-bill= 2.32% or 2.48% Inflation 2.915% or 3.1168% C. average real return for Treasury bills (1 + R) = (1 + r)(1 + h) (1.07746x1.092975)-1= 17.76%

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