- CFA Exams
- CFA Level I Exam
- Study Session 12. Fixed Income (1)
- Reading 32. The Term Structure and Interest Rate Dynamics
- Subject 7. Yield Curve Factor Models

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**CFA Practice Question**

The daily standard deviation for a 1-year T-bill is 0.328%. Assume there are 250 trading days per year. The annualized standard deviation (interest rate volatility) should be:

A. 2.07%

B. 5.186%

C. 82%

**Explanation:**0.00328% x 250

^{1/2}= 5.186%.

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**User Contributed Comments**
4

User |
Comment |
---|---|

pmdallman |
Why is the 250 compounded to the .5 power? |

birdperson |
check the formula @pmdallman! |

gakash |
Can you please tell which formula? |

LoCo83 |
Click on "Check LOS" on the right side menu. It converts monthly standard deviation to annual, but a similar logic applies to daily/weekly. |