Consider the following table for an eight-year period: Year T-bill return Inflation 123L 7.41% 8.59% 8.64 12.22 5.99 6.82 4 5.67 4.98 5.57 6.58 6 8.24 8.90 7 8 10.68 12.70 13.17 12.40 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. a. Treasury bills Inflation rate b. Treasury bills 8.11 % 9.21 % % % -1.09% -3.19 % Inflation rate c. Year 1 Year 2 Year 3 -0.78% Year 4 0.66% Year 5 -0.95 % Year 6 -0.61 % Year 7 -2.20% Year 8 0.27% d. Average real return -0.99%
Consider the following table for an eight-year period: Year T-bill return Inflation 123L 7.41% 8.59% 8.64 12.22 5.99 6.82 4 5.67 4.98 5.57 6.58 6 8.24 8.90 7 8 10.68 12.70 13.17 12.40 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. a. Treasury bills Inflation rate b. Treasury bills 8.11 % 9.21 % % % -1.09% -3.19 % Inflation rate c. Year 1 Year 2 Year 3 -0.78% Year 4 0.66% Year 5 -0.95 % Year 6 -0.61 % Year 7 -2.20% Year 8 0.27% d. Average real return -0.99%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Consider the following table for an eight-year period:
Year
T-bill return
Inflation
123L
7.41%
8.59%
8.64
12.22
5.99
6.82
4
5.67
4.98
5.57
6.58
6
8.24
8.90
7
8
10.68
12.70
13.17
12.40
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.
a. Treasury bills
Inflation rate
b. Treasury bills
8.11 %
9.21 %
%
%
-1.09%
-3.19 %
Inflation rate
c. Year 1
Year 2
Year 3
-0.78%
Year 4
0.66%
Year 5
-0.95 %
Year 6
-0.61 %
Year 7
-2.20%
Year 8
0.27%
d. Average real return
-0.99%
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