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 25% 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 = 3. Assume the utility function is U = E(r) — 0.5 x A02. (Negative
amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 4 decimal places.) WBills Wlndex U(A = 3)
0.0
0.2
0.4
0.6
0.8
1.0
