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pleasd read carefully and answer asvearly as possible Problem 6-12 Consider historical data showing that the average annual rate of return on the S&P 500

pleasd read carefully and answer asvearly as possible

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Problem 6-12 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 38% 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-RW 0.5 * 407. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 4 decimal places.) WBills Windex U(A-3) 0.0 1.0 02 04 06 06 0.41 0.8 0.2 10 00

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