Cerra Co. expects to receive 5 million euros and 5 million pounds as a result of selling goods to the Europe.

1. Based on the following information, estimates the standard deviation of monthly percentage changes in the exchange rate of the portfolio (euros and pounds) based on the data in the last 7 months.

Month	Euro	Pound
1	$1.13	$1.27
2	$1.12	$1.25
3	$1.11	$1.22
4	$1.10	$1.24
5	$1.11	$1.27
6	$1.13	$1.29
7	$1.11	$1.31

2. Assume that these percentage changes are normally distributed. Use the value-at-risk (VAR) method based on a 95% confidence level. What is the maximum one-month loss if the expected percentage change of the portfolio is 0.1%?