WER plc purchases two main types of currency to pay for imports, the US dollar and the euro. (Hint: you are expected to have access to the internet and Excel.)

a Go to the Bank of England exchange rates site (www.bankofengland.co.uk/boeapps/database/Rates.

asp?Travel=NIxAZx&into=GBP) and download daily exchange rates to derive the following up to date equivalents of the following data or take the monthly standard deviation for one year of GBPEUR as 1.24 per cent and GBPUSD as 1.85 per cent and the correlation as 0.48 and calculate the combined monthly standard deviation.

b Show how the formula is related to the variance covariance grid.