Consider historical data showing that the average annual rate of return on the S&P $500$ portfolio over the past $95$ years has averaged roughly $8\%$ more than the Treasury bill return and that the S&P $500$ 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 $2\%.$

Calculate the expected return and variance of portfolios invested in T$-$bills and the S&P $500$ index with weights as shown below.

Note: Round your "Expected Return" answers to $2$ decimal places and "Variance" answers to $4$ decimal places.

W Bills W index Expected Return Variance

$0\mathrm{.}01\mathrm{.}010\mathrm{.}000\mathrm{.}0400$ Example