Consider the following table for an eight-year period: Year T-bill return Inflation 1 7.48% 8.52% 2 8.99 12.15 3 6.06 6.75 4 6.02 5.05 5 5.64 6.51 6 8.59 8.83 7 8 10.75 13.05 13.10 12.33 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 "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? 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. Treasury bills Inflation rate b. Treasury bills Inflation rate c. Year 1 Year 2 8.32 % 9.24 % % % % % 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 Inflation 1 7.48% 8.52% 2 8.99 12.15 3 6.06 6.75 4 6.02 5.05 5 5.64 6.51 6 8.59 8.83 7 8 10.75 13.05 13.10 12.33 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 "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? 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. Treasury bills Inflation rate b. Treasury bills Inflation rate c. Year 1 Year 2 8.32 % 9.24 % % % % % 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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Question
Consider the following table for an eight-year period: \table[[Year,T-bill return,Inflation],[1,7.48%,8.52% Solve for C. And D. only. -- a. and b. are taken care of
Transcribed Image Text:Consider the following table for an eight-year period:
Year
T-bill return
Inflation
1
7.48%
8.52%
2
8.99
12.15
3
6.06
6.75
4
6.02
5.05
5
5.64
6.51
6
8.59
8.83
7
8
10.75
13.05
13.10
12.33
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 "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?
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. Treasury bills
Inflation rate
b. Treasury bills
Inflation rate
c. Year 1
Year 2
8.32 %
9.24 %
%
%
%
%
Year 3
%
Year 4
%
Year 5
%
Year 6
%
Year 7
%
Year 8
%
d. Average real return
%
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