Table 9.2 Average Returns for Bonds Low-risk bonds 1950 to 1959 Average 2.1 % 19
ID: 2740511 • Letter: T
Question
Table 9.2 Average Returns for Bonds
Low-risk bonds
1950 to 1959 Average 2.1 %
1960 to 1969 Average 4.0
1970 to 1979 Average 6.5
1980 to 1989 Average 8.4
1990 to 1999 Average 5.0
2000 to 2009 Average 2.5
Table 9.4 Annual Standard Deviation for T-Bills
Low-risk bonds
1950 to 1959 1.1 %
1960 to 1969 1.5
1970 to 1979 2.0
1980 to 1989 2.7
1990 to 1999 1.2
2000 to 2009 1.8
Use the tables above to calculate the coefficient of variation of the risk-return relationship in T-bills during each decade since 1950. (Round your answers to 2 decimal places.)
Decade CoV 1950s
1960s ?
1970s ?
1980s ?
1990s ?
2000s ?
Explanation / Answer
Coefficient of variation = Standard Deviation / Expected Return
So
CoV 1950s = 1.1/2.1 = 0.52381
CoV 1960s = 1.5/4 = 0.375
CoV 1970s = 2/6.5 = 0.308
CoV 1980s = 2.7/8.4 = 0.321
CoV 1990s = 1.2/5 = 0.24
CoV 2000s = 1.8/2.5 = 0.72
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