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HELPPPP MEEEE Consider historical data showing that the average annual rate of return on the S&P 500 portfolio over the past 85 years has averaged
HELPPPP MEEEE
Consider historical data showing that the average annual rate of return on the S&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 29% per year. Assume these values are representative of Investors' expectations for future performance and that the current T-bill rate is 4%. Calculate the utility levels of each portfolio for an Investor with A=2 Assume the utility function is U = E(r) - 0.5 * Ac?. (Do not round Intermediate calculations. Round your answers to 4 decimal places. Negative amounts should be indicated by a minus sign.) U(A = 2) WBills 0.01 0.2 Windex 1.0 0.8 0.6 0.4 0.2 0.0 0.6 0.8 1.0 You manage a risky portfolio with an expected rate of return of 21% and a standard deviation of 33%. The T-bill rate is 7%. Your client chooses to invest 75% of a portfolio In your fund and 25% in a T-bill money market fund. Suppose that your risky portfolio Includes the following Investments in the given proportions: Stock A Stock B Stock C 29 % 36 % 35 % What are the investment proportions of your client's overall portfolio, including the position in T-bills? (Round your answers to 1 decimal place.) Investment Proportions T- BS Stock A Stock B Stock CStep by Step Solution
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