The Fact That Historical Returns on Treasury Bills Are Less

question 11

Multiple Choice

The fact that historical returns on Treasury bills are less volatile than common stock returns indicates that:

• A) the variance of Treasury bill returns is zero.
• B) the standard deviation of Treasury bill returns is negative.
• C) the real return on Treasury bills has been negative.
• D)common stocks should offer a higher return than Treasury bills.

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Definitions:

Lead

The initiation or start of a project or process, or the advantage or interval by which someone or something is ahead in a competition or race.

Lag

The time delay between a cause and its observable effect, often used in economics, technology, and signal processing contexts.

Straddle

In finance, a strategy involving the purchase or sale of both a call and a put option on the same asset, with the same expiration date and strike price, to profit from a significant price movement in either direction.

Bottlenecks

Points of congestion or obstruction in a system that significantly delay the process flow or reduce the overall system's performance.