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 1950 to 1959 Average 1960 to 1969 Average 970 to 1979 Average 1980 to 1989 Average 1990 to 1999 Average 2000 to 2009 Average 2.2% 4.1 6.3 8.8 5.3 2.9 Table 9.4 Annual Standard Deviation for T-Bills 1950 to 1959 1960 to 1969 1970 to 1979 1980 to 1989 990 to 1999 2000 to 2009 0.4% 1.7 2.0 2.7 1.1 1.7 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) 1950s 1960s 1970s 1980s 1990s 2000s 0 F7 esc F5 FI 8

Explanation / Answer

Coeffcient of Variation=Standard Deviation/Mean

1950-69: CV=0.4%/2.2%=0.181818
1960-69: CV=1.7%/4.1%=0.414634
1970-79: CV=2%/6.3%=0.31746
1980-89: CV=2.7%/8.8%=0.306818
1990-99: CV=1.1%/5.3%=0.207547
2000-09: CV=1.7%/2.9%=0.586207

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