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Consider historical data showing that the average annual rate of return on the 5&P 500 portfolio over the past 85 years has averaged roughly 8%
Consider historical data showing that the average annual rate of return on the 5&P 500 portfolio over the past 85 years has averaged roughly 8% more than the Treasury bill return and that the S&P 500 standard deviation has been about 33% per year. Assume these values are representative of investors' expectations for future performance and that the current T-bill rate is 3%. Calculate the utility levels of each portfolio for an investor with A= 2. Assume the utility function is U = E{r) - 8.5 = A2, (Do not round intermediate calculations. Round your answers to 4 decimal places. Negative amounts should be indicated by a minus sign. ) ) Answer is complete but not entirely correct. WEills Windex 0.0 1.0 (0.0220) 0.2 0.8 00243 04 0.6 0.0382 & 0.6 0.4 0.0445 & 0.8 0.2 0.0416 & 1.0 0.0
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