Question

Suppose we have the following Treasury bill returns and inflation rates over an eight-year period: Year...

Suppose we have the following Treasury bill returns and inflation rates over an eight-year period:

Year Treasury Bills Inflation
1 10.45%         12.55%        
2 11.36            16.00           
3 9.06            10.29           
4 8.34            7.97           
5 8.88            10.29           
6 11.23            12.77           
7 14.11            16.98           
8 15.97            16.90           
a.

Calculate the average return for Treasury bills and the average annual inflation rate 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 period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
c. What was the average real return for Treasury bills over this period? (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.)

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