International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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1, Consider the following table for an eight-year period: Year T-bill return Inflation 1 7.47% 8.53% 2 8.94 12.16 3 6.05 6.76 4 5.97 5.04 5 5.63 6.52 6 8.54 8.84 7 10.74 13.11 8 13.00 12.34
a, Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period.
b, Calculate the standard deviation of Treasury bill returns and inflation over this time period.
c, Calculate the real return for each year.
d, What is the average real return for Treasury bills?
The inflation rates in the U.S. economy for 2012 through 2015 are 1.7%, 1.5%, 0.7%, and 0.8%, respectively.† What was the purchasing power of a dollar at the beginning of 2016 compared to that at the beginning of 2012? (Round your answer to the nearest cent.)
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. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Treasury bills
%
Inflation
%
b.
Calculate the standard deviation of Treasury bill returns and inflation over this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Treasury bills
%
Inflation
%…
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- Consider the following table for an eight-year period: Year T-bill return Inflation 1 7.47 % 8.53 % 2 8.94 12.16 3 6.05 6.76 4 5.97 5.04 5 5.63 6.52 6 8.54 8.84 7 10.74 13.11 8 13.00 12.34 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…arrow_forwardYou observe that the current interest rate on short-term U.S. Treasury bills is 4.86 percent. You also read in the newspaper that the GDP deflator, which is a common macroeconomic indicator used by market analysts to gauge the inflation rate, currently implies that inflation is 1.65 percent. What is the approximate real rate of interest on short-term Treasury bills? (Enter your answer as a percent rounded to 2 decimal places.)arrow_forwardWhat exact real rate of return is implied by a nominal return of 6% and an inflation rate of 2.4% over the same time period?(please write answer in a decimal format using 5 decimal places)arrow_forward
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