please give me answer relatable Suppose we have the following Treasury bill returns and inflation rates over an eight-year period:YearTreasurybillsInflation123456989.01%10.86%9.8714.417.628.8046.716.3957.208.5669.5010.99712.3315.15814.0914.89a. Calculate the average return for Treasury bills and the average annual inflation rate forthis period. (Do not round intermediate calculations and enter your answers as apercent rounded to 2 decimal places, e.g., 32.16.)b. Calculate the standard deviation of Treasury bill returns and inflation over this period.(Do not round intermediate calculations and enter your answers as a percentrounded to 2 decimal places, e.g., 32.16.)c. What was the average real return for Treasury bills over this period? (A negativeanswer should be indicated by a minus sign. Do not round intermediatecalculations and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.)

A. Average Return The average return is the simple mathematical average of a series of returns…

Answered: Suppose we have the following Treasury…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter8: Relationships Among Inflation, Interest Rates, And Exchange Rates

Section: Chapter Questions

Problem 2IEE

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Suppose we have the following Treasury bill returns and inflation rates over an eight- year period: Year Treasury Bills Inflation 9.57% 12345678 7.96% 8.76 6.59 5.74 6.17 8.41 11.38 13.02 13.22 7.71 5.48 7.47 9.84 14.14 13.56 c. What is the average real return for Treasury bills over this period? (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
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6. The Fisher effect and the cost of unexpected inflation Suppose the nominal interest rate on savings accounts is 11% per year, and both actual and expected inflation are equal to 6%. Complete the first row of the table by filling in the expected real interest rate and the actual real interest rate before any change in the money supply. Time Period Nominal Interest Rate Expected Inflation Actual Inflation Expected Real Interest Rate Actual Real Interest Rate (Percent) (Percent) (Percent) (Percent) (Percent) Before increase in MS 11 6 6 Immediately after increase in MS 11 6 10 Now suppose the Fed unexpectedly increases the growth rate of the money supply, causing the inflation rate to rise unexpectedly from 6% to 10% per year. Complete the second row of the table by filling in the expected and actual real interest rates on savings accounts immediately after the increase in the money supply (MS). The unanticipated change in…

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