Consider the risk-return relationship in T-bills during each decade since 1950.Given this data,which of the following statements is correct?
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 the statements 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? 
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 the statements are correct.

Quizplus · Accepted Answer

The lower the coefficient of variation, the better the risk-return relationship. All these CoVs are very low. While they appear to have great risk-return relationships, it is because the risk is very low. T-bills are very safe instruments. However, they offer very low returns.

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