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 %
Chapter8: Relationships Among Inflation, Interest Rates, And Exchange Rates
Section: Chapter Questions
Problem 2IEE
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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
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