Treasury bill returns are 5%,4%,3%,and 6% over four years.The standard deviation of returns of Treasury bills is:

Question

Quizplus · Accepted Answer

The formula for standard deviation is:

σ = sqrt [ Σ(xi - x̄)^2 / N ]

where Σ is the sum of the squared deviation scores, xi is each individual score, x̄ is the mean, and N is the sample size.

Using this formula, we can calculate the standard deviation of the four treasury bill returns:

Mean return (x̄) = (5% + 4% + 3% + 6%) / 4 = 4.5%

Σ(xi - x̄)^2 = [(5% - 4.5%)^2 + (4% - 4.5%)^2 + (3% - 4.5%)^2 + (6% - 4.5%)^2]/4 = 0.69%

N = 4

σ = sqrt [0.69%/4] ≈ 1.29%

Therefore, the best choice is D, 1.29%.

Treasury Bill Returns Are 5%,4%,3%,and 6% Over Four Years