Consider the risk-return relationship in T-bills during each decade since 1950. Given this data, which of the following statements is correct?
$$\begin{array} { c c }
\text { Decade } & \text { CoV } \
1950 \mathrm {~s} & 0.40 \
1960 \mathrm {~s} & 0.33 \
1970 \mathrm {~s} & 0.29 \
1980 \mathrm {~s} & 0.29 \
1990 \mathrm {~s} & 0.24 \
2000 \mathrm {~s} & 0.55
\end{array}$$
A) The best risk-return relationship was during the 1950s.
B) The best risk-return relationship was during the 1990s.
C) Since T-bills are backed by the full faith of the U.S. government, computing the risk-return relationship for them is invalid.
D) None of these choices are correct.

Question

Consider the risk-return relationship in T-bills during each decade since 1950. Given this data, which of the following statements is correct?
$$\begin{array} { c c } 
\text { Decade } & \text { CoV } \
1950 \mathrm {~s} & 0.40 \
1960 \mathrm {~s} & 0.33 \
1970 \mathrm {~s} & 0.29 \
1980 \mathrm {~s} & 0.29 \
1990 \mathrm {~s} & 0.24 \
2000 \mathrm {~s} & 0.55
\end{array}$$
A) The best risk-return relationship was during the 1950s.
B) The best risk-return relationship was during the 1990s.
C) Since T-bills are backed by the full faith of the U.S. government, computing the risk-return relationship for them is invalid.
D) None of these choices are correct.

Quizplus · Accepted Answer

The best risk-return relationship is indicated by the lowest Coefficient of Variation (CoV), which measures risk per unit of return. The 1990s had the lowest CoV at 0.24, indicating the best risk-return relationship during that decade.

Consider the Risk-Return Relationship in T-Bills During Each Decade Since