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The following table contains monthly returns for Cola Co. and Gas Co. for 2013 (the returns are shown in decimal form, i.e., 0.035 is 3.5%

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The following table contains monthly returns for Cola Co. and Gas Co. for 2013 (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 55% invested in Cola Co. stock and 45% 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. c. How do your results compare? \begin{tabular}{crr} Month & Cola Co. & Gas Co. \\ \hline January & -0.0210 & 0.0280 \\ February & 0.0000 & -0.0050 \\ March & -0.0200 & -0.0180 \\ April & 0.0090 & 0.0280 \\ May & -0.0310 & 0.0840 \\ June & -0.0840 & -0.0460 \\ July & -0.1190 & 0.0820 \\ August & -0.0160 & 0.0460 \\ September & 0.0550 & 0.0300 \\ October & -0.0110 & 0.0140 \\ November & -0.0380 & 0.0290 \\ December & -0.0220 & 0.0740 \\ \hline \end{tabular}

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