Predicting T-bill return. Figure 10.16 (page 554) uses statistical software to predict the return on Treasury bills in a year when the inflation rate is 3.7%. Let’s do this without specialized software. Figure 10.10 contains Excel regression output. Use a calculator or software to find the variance s2 x of the annual inflation rates in Table 10.1.

From this information, find the 95% prediction interval for one year’s T-bill return.

Check your result against the software output in Figure 10.16.