Consider the following table for the period from 1973 through 1980. Year 1973 1974 1975 1976 1977 1978 1979 1980 T-bill return 6.93% 8.00 5.80 5.08 5.12 7.18 10.38 11.24 Inflation 8.80% 12.20 7.01 4.81 6.77 9.03 13.31 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. 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?
Consider the following table for the period from 1973 through 1980. Year 1973 1974 1975 1976 1977 1978 1979 1980 T-bill return 6.93% 8.00 5.80 5.08 5.12 7.18 10.38 11.24 Inflation 8.80% 12.20 7.01 4.81 6.77 9.03 13.31 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. 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?
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 the period from 1973 through 1980.
Inflation
8.80%
12.20
7.01
4.81
6.77
9.03
13.31
12.40
Year
1973
1974
1975
1976
1977
1978
1979
1980
T-bill return
6.93%
8.00
5.80
5.08
5.12
7.18
10.38
11.24
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. 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. 1973
1974
1975
1976
1977
1978
1979
a. Average return for Treasury bills
Average annual inflation rate
b. Standard deviation of Treasury bills
Standard deviation of the inflation rate
1980
d. Average real return for Treasury bills
%
%
%
%
%
Le Le Le 2
%
%
%
%
%
%
%
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