Problem 9-20 Risk versus Return in T-bills (LG9-2, LG9-4) Table 9.2 Average Retu

Question

Problem 9-20 Risk versus Return in T-bills (LG9-2, LG9-4)

Table 9.2 Average Returns for Bonds   

Low-risk bonds   

1950 to 1959 Average 2.6 %   

1960 to 1969 Average 4.7   

1970 to 1979 Average 6.1   

1980 to 1989 Average 8.3   

1990 to 1999 Average 5.4   

2000 to 2009 Average 2.3

Table 9.4 Annual Standard Deviation for T-Bills

Low-risk bonds   

1950 to 1959 1.0 %   

1960 to 1969 1.3   

1970 to 1979 2.1   

1980 to 1989 3.0   

1990 to 1999 1.5   

2000 to 2009 2.2    

Calculate the coefficient of variation of the risk-return relationship (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 1950's = 1/ 2.6 = 38.46%

Coefficient of Variation 1960's = 1.3/ 4.7 = 27.66%

Coefficient of Variation 1970's = 2.1/ 6.1 = 34.43%

Coefficient of Variation 1980's = 3/ 8.3 = 36.14%

Coefficient of Variation 1990's = 1.5/ 5.4 = 27.78%

Coefficient of Variation 2000's = 2.2/ 2.3 = 95.65%

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