Consider the following table for an eight-year period:Year12345678T-bill returnInflation7.40%8.60%8.5912.235.986.835.624.975.566.598.198.9110.6713.1812.6512.41a. Calculate the average return for Treasury bills and the average annual inflation rate(consumer price index) for this period. (Do not round Intermediate calculations andenter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)b. Calculate the standard deviation of Treasury bill returns and inflation over this timeperiod. (Do not round Intermediate calculations and enter your answers as apercent rounded to 2 decimal places, e.g., 32.16.)c. Calculate the real return for each year. (A negative answer should be Indicated by aminus sign. Leave no cells blank - be certain to enter "O" wherever required. Do notround Intermediate calculations and enter your answers as a percent rounded to 2decimal places, e.g., 32.16.)d. What is the average real return for Treasury bills? (A negative answer should beIndicated by a minus sign. Do not round Intermediate calculations and enter youranswer as a percent rounded to 2 decimal places, e.g., 32.16.)a. Treasury bills96Inflation rate96b.Treasury bills96Inflation rate96C.Year 196Year 296Year 396Year 496Year 596Year 696Year 796Year 896d. Average real return96

Standard deviation refers to the dispersion of data from its mean value defines high standard…

Answered: Consider the following table for an…

Consider the following table for an eight-year period: Year 12345678 T-bill return Inflation 7.40% 8.60% 8.59 12.23 5.98 6.83 5.62 4.97 5.56 6.59 8.19 8.91 10.67 13.18 12.65 12.41

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Consider the following table for an eight-year period:
Year
1
2345678
T-bill return
Inflation
7.40%
8.60%
8.59
12.23
5.98
6.83
5.62
4.97
5.56
6.59
8.19
8.91
10.67
13.18
12.65
12.41
a. Calculate the average return for Treasury bills and the average annual inflation rate
(consumer price index) for this period. (Do not round Intermediate calculations and
enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
b. Calculate the standard deviation of Treasury bill returns and inflation over this time
period. (Do not round Intermediate calculations and enter your answers as a
percent rounded to 2 decimal places, e.g., 32.16.)
c. Calculate the real return for each year. (A negative answer should be Indicated by a
minus sign. Leave no cells blank - be certain to enter "O" wherever required. Do not
round Intermediate calculations and enter your answers as a percent rounded to 2
decimal places, e.g., 32.16.)
d. What is the average real return for Treasury bills? (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. Treasury bills
96
Inflation rate
96
b.
Treasury bills
96
Inflation rate
96
C.
Year 1
96
Year 2
96
Year 3
96
Year 4
96
Year 5
96
Year 6
96
Year 7
96
Year 8
96
d. Average real return
96

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Price $925.93 YTM 8.00% 853.39 8.25 782.92 8.50 15.00 8.75 650.00 9.00 a. Calculate the forward rate of interest for each year. b. What is the 2-year forward rate beginning in year 3? Maturity (years) 1 2345
Assume that the expected rates of inflation over the next 5 years are 9 percent, 7 percent, 10 percent, 8 percent, and 6 percent, respectively. What is the average expected inflation rate over this 5-year period? Group of answer choices 9% 7% %5 8%
What is the real interest rate given a nominal rate of 8.7% and an inflation rate of 1.5%? A. 11.3% B. 8.5% C. 7.1% D. 9.9%
The 6-month US Treasury bill is trading at 98.91% of par while the 1-year US Treasury bill is trading at 97.56% of par. What is the 6 month forward 6 month rate? Please give your answer as an annualized rate and such that if the value is 10.2% you type in 10.2 (not decimal, not 0.102)
Suppose the real rate is 8.5 percent and the Inflation rate is 2 percent. What rate would you expect to see on a Treasury bill? Multiple Cholce 9.60% 11.74% 9.07% 12.27% 10.67%
Complete the following using present value. (Use the Table provided.) (Do not round intermediate calculations. Round the "Rate used" to the nearest tenth percent. Round the "PV factor" to 4 decimal places and final answer to the nearest cent.) Amount desired at end of period 6,600 Length of time 10 years Rate 2% Compounded semiannually On PV Table 12.3 Period used 120 Rate used 0.2 % PV factor used 0.2400 $ PV of amount desired at end of period 1,584.08
Find the future value. (Use the Table 12.1.) (Do not round intermediate calculations. Round the "FV factor" to 4 decimal places and final answer to the nearest cent.) $ Present value 11,129.37 Length of time 5 years Rate 12% Compounded Quarterly On FV Table 12.1 Period used 20 Rate used 3% FV factor used Future value
Bhupatbhai
Unbiased Expectations Theory Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows 1R1=4.85%, E(2r1) =5.85%, E(3r1) =6.35%, E(4r1)=6.70% Using the unbiased expectations theory, what is the current (long-term) rate for four-year-maturity Treasury securities?
If the interest rate is 6% and the average inflation rate is 3.1%, what is the approximate future value of $75,000 in 20 years? $42,340 $89,743 $240,535 $132,852
What is the period in years?
Consider the following table for a seven-year period: Year 1 2 3 4 5 6 7 U.S. Treasury Bills 3.45% 3.30 4.20 4.62 2.42 1.30 1.03 Returns Average real return Inflation -1.15% -2.29 -1.19 0.61 -6.43 -9.35 -1.30 What was the average real return for Treasury bills for this time period? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. %

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