Coles group (COL) shares have an annual average return of 14% and an annual return standard deviation of 35%. Returns are assumed to be normally distributed. Provide the following risk measures and show your working.

1. Calculate the stock's 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 Rio Tinto (RIO) stocks (50% weighting in each stock) where RIO has an average annual return of 18% and an annual standard deviation of 50% and the two stocks have a correlation of 0.3.