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Treasury Bills Returns and Inflation

Calculating Returns

Refer to the following table:
Year T-Bill Return Inflation
1973 0.0729 0.0871
1974 0.0799 0.1234
1975 0.0587 0.0694
1976 0.0507 0.0486
1977 0.0545 0.0670
1978 0.0764 0.0902
1979 0.1056 0.1329
1980 0.1210 0.1252

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 sign (%). Round answers to 2 decimal places, e.g. 32.16.)

Average Treasury bill return percent

Average inflation percent

Requirement 2:

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

Standard deviation

T-bills percent

Inflation percent

Requirement 3:

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

Average real return ______ percent

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Calculating Returns

Refer to the following table:
Year T-Bill Return Inflation
1973 0.0729 0.0871
1974 0.0799 0.1234
1975 0.0587 0.0694
1976 0.0507 0.0486
1977 0.0545 0.0670
1978 0.0764 0.0902
1979 0.1056 0.1329
1980 0.1210 0.1252

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 sign (%). Round answers to 2 decimal places, e.g. 32.16.)

Average Treasury bill return percent

Average inflation percent

Requirement 2:

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

Standard deviation

T-bills percent

Inflation percent

Requirement 3:

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

Average real return ______ ...

Solution Summary

The solution:
1) Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index).
2) Calculates the standard deviation of Treasury bill returns and inflation.
3) Calculates the average real return for Treasury bills.

$2.19