Problem 12-22 Bond Returns [LO2, 3]

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

Year	Treasury Bills	Inflation
1	7.45	8.90
2	8.17	12.55
3	6.04	7.12
4	5.33	5.11
5	5.72	6.98
6	7.92	9.31
7	10.86	13.57
8	12.42	12.87

a.	Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. (Round your answers 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 and round your final answers to 2 decimal places. (e.g., 32.16))

Treasury bills	%
Inflation	%

c.	What was the average real return for Treasury bills over this period? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))

Average real return

%