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Consider historical data showing that the average annual rate of return on the S&P/TSX Composite portfolio over the past 60 years has averaged roughly
Consider historical data showing that the average annual rate of return on the S&P/TSX Composite portfolio over the past 60 years has averaged roughly 8% more than the Treasury bill return and that the S&P/TSX Composite standard deviation has been about 20% per year. Assume these values are representative of investors' expectations for future performance and that the current T-bill rate is 5%. Calculate the utility levels of each portfolio for an investor with A = 3. Assume the utility function is u = E(r) intermediate calculations. Round your answers to 4 decimal places.) - 0.5 x A. (Do not round WBills WIndex U(A = 3) 0.0 1.0 0.0750 0.2 0.8 0.4 0.6 0.6 0.4 0.8 0.2 1.0 0.0 0.0500
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