CFA Practice Question

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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 2501/2 = 5.186%.

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.
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