Consider the following table for an eight-year period:

Year T-bill return Inflation

1 7.30% 8.70%

2 8.09 12.33

  3 5.88 6.93

  4 5.12 4.87

  5 5.46 6.69

6 7.69 9.01

  7 10.57 13.28

8 12.15 12.51

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

Average return for Treasury bills

 %

Average annual inflation rate

 %

Calculate the standard deviation of Treasury bill returns and inflation over this time period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Standard deviation of Treasury bills

 %

Standard deviation of inflation

 %

Calculate the real return for each year. (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.)

Year Real return

1 %

2 %

3 %

4 %

5 %

6 %

7 %

8 %

What is the average real return for Treasury bills? (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.)

Average real return for Treasury bills %