Table 9.2 Average Returns for T-bills T-Bills 1950 to 1959 Average 2.0 % 1960 to

Question

Table 9.2 Average Returns for T-bills T-Bills 1950 to 1959 Average 2.0 % 1960 to 1969 Average 4.0 1970 to 1979 Average 6.3 1980 to 1989 Average 8.9 1990 to 1999 Average 4.9 2000 to 2009 Average 2.8 Table 9.4 Annual Standard Deviation for T-Bills T-Bills 1950 to 1959 0.8 % 1960 to 1969 1.3 1970 to 1979 1.8 1980 to 1989 2.6 1990 to 1999 1.2 2000 to 2009 1.9 Calculate the coefficient of variation of the risk-return relationship in T-bills (Use the above Tables) 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 = 0.8/2.0 = 0.04

CoV 1960s = 1.3/4 = 0.33

CoV 1970s = 1.8/6.3 = 0.29

CoV 1980s = 2.6/8.9 = 0.29

CoV 1990s = 1.2/4.9 = 0.25

CoV 2000s = 1.9/2.8 = 0.68

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