Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help me find the votality by using that formula! The following table contains monthly returns for Cola Co. and Gas Co. for 2013 E

image text in transcribedimage text in transcribed

Please help me find the votality by using that formula!

The following table contains monthly returns for Cola Co. and Gas Co. for 2013 E (the returns are shown in decimal form, i.e., 0.035 is 3.5% ). Using this table and the fact that Cola Co. and Gas Co. have a correlation of - 0.0969 , calculate the volatility (standard deviation) of a portfolio that is 60% invested in Cola Co. stock and 40% invested in Gas Co. stock. Calculate the volatility by: a. Using the formula: Var(Rp)=w12SD(R1)2+w22SD(R2)2+2w1w2Corr(R1,R2)SD(R1)SD(R2) b. Calculating the monthly returns of the portfolio and computing its volatility directly. The volatility (standard deviation) of the portfolio is \%. (Round to two decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Financial Management

Authors: Brigham, Daves

10th Edition

978-1439051764, 1111783659, 9780324594690, 1439051763, 9781111783655, 324594690, 978-1111021573

More Books

Students also viewed these Finance questions

Question

In what ways is economics a science?

Answered: 1 week ago