Transcribed Image Text
Consider historical data showing that the average annual rate ofreturn on the S&P 500 portfolio over the past 85 years hasaveraged roughly 8% more than the Treasury bill return and that theS&P 500 standard deviation has been about 37% per year. Assumethese values are representative of investors' expectations forfuture performance and that the current T-bill rate is 5%.Calculate the utility levels of each portfolio for an investorwith A = 2. Assume the utility function is U =E(r) ? 0.5 × A?2. (Donot round intermediate calculations. Round your answers to 4decimal places.)WBillsWIndexU(A = 2)0.01.00.20.80.40.60.60.40.80.21.00.
Other questions asked by students
General Management
Accounting