BHB shares have an annual average return of 15% and an annual return standard deviation of 25%. Returns are assumed to be normally distributed. Provide the following risk measures and show your working.

1. Calculate the stocks Value-at-Risk (VaR) at the 95% level over the 1-year horizon. Interpret this result.
2. Recalculate and interpret a portfolio Value-at-Risk (VaR) at the 95% level over the 1year horizon if it were combined with Blue Scope Steel (BSL) stocks (75% weight in BHP shares and 25% in BSL shares) where BSL has an average annual return of 42% and an annual standard deviation of 60% and the two stocks have a correlation of 0.4.