Question

Treasury bill returns are 4%, 3%, 2%, and 5% over four years. The standard deviation of returns

of Treasury bills is ________.

A) 1.55%

B) 1.03%

C) 0.90%

D) 1.29%

Answer 1

Option (D) 1.29%

Step-by-step explanation:

Data provided in the question:

Treasury bill returns over four years :

4%, 3%, 2%, and 5%

Now,

Average return = (4% + 3% + 2%+ 5%) ÷ 4

= 3.5%

Standard deviation = [ ∑(Return - Mean)² ] ÷ [ n -1 ]

= [ (4% - 3.5%)² + (3% - 3.5%)² + (2% - 3.5%)² + (5% - 3.5%)² ] ÷ [ 4 - 1 ]

= 3.87% ÷ 3

= 1.29%

Hence,

Option (D) 1.29%