1.

The following spreadsheet contains monthly returns for Cola Co. and Gas Co. for

2013.

Using these data, estimate the average monthly return and the volatility for each stock.

Cola Co. Gas Co. January -0.0990 0.0440 February -0.0160 0.0560 March 0.0420 -0.0130 April -0.0260 -0.0200 May -0.0910 -0.0160 June -0.0820 -0.0380 July 0.1200 0.0470 August -0.0070 0.0040 September -0.0700 -0.0090 October 0.0120 0.0040 November 0.0920 0.1020 December -0.0110 0.0550

The average monthly return for Cola Co. is ___%.

(Round to two decimal places.)

2. Given $100,000 to invest, construct a value-weighted portfolio of the four stocks listed below.

Stock Price/Share ($) Number of shares outstanding (millions) Golden Seas 15 1 Jacobs and Jacobs 21 1.59 MAG 42 27.92 PDJB 8 13.29

Enter the portfolio weight below:(Round to two decimal places.)

Stock	% of Total Value (portfolio weight)
Golden Seas		_______%

3. Stocks A and B have the following returns:

Stock A Stock B 1 0.11 0.05 2 0.07 0.02 3 0.13 0.04 4 -0.03 0.01 5 0.09 -0.04

What are the standard deviations of the returns of the two stocks?

If their correlation is 0.45, what is the expected return and standard deviation of a portfolio of 55% stock A and 45% stock B?