Consider the following table for an eight-year period: Year T-bill return 1 2 3 4 5 6 7 8 7.34% 8.29 5.92 5.32 5.50 7.89 10.61 12.35 a. Treasury bills Inflation rate b. Treasury bills Inflation rate Inflation 8.66% a. 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. b. 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. c. Calculate the real return for each year. Note: A negative answer should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. 12.29 6.89 4.91 6.65 8.97 13.24 12.47 d. 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. c. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 d. Average real return % % % % % % % % % % % % %
Consider the following table for an eight-year period: Year T-bill return 1 2 3 4 5 6 7 8 7.34% 8.29 5.92 5.32 5.50 7.89 10.61 12.35 a. Treasury bills Inflation rate b. Treasury bills Inflation rate Inflation 8.66% a. 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. b. 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. c. Calculate the real return for each year. Note: A negative answer should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. 12.29 6.89 4.91 6.65 8.97 13.24 12.47 d. 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. c. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 d. Average real return % % % % % % % % % % % % %
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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Transcribed Image Text:Consider the following table for an eight-year period:
Year T-bill return
1
2
WN
3
4
5678
7.34%
a. Treasury bills
Inflation rate
b. Treasury bills
Inflation rate
8.29
5.92
5.32
5.50
7.89
10.61
12.35
Inflation
8.66%
a. 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.
b. 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.
c. Calculate the real return for each year.
Note: A negative answer should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" 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?
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.
c. Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
d. Average real return
12.29
6.89
4.91
6.65
8.97
13.24
12.47
%
%
%
%
%
%
%
%
%
%
%
%
%
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