The following table contains monthly returns for Cola Corporation and Gas Corporation for 2012

???(The returns are shown in decimal?form, i.e., 0.035 is?3.5%.) Using this table and the fact that Cola Corporation and Gas Corporation have a correlation of negative 0.0969

?0.0969?, calculate the volatility?(standard deviation) of a portfolio that is 65 %

65% invested in Cola Corporation shares and 35 %

35% invested in Gas Corporation shares. Calculate the volatility by

a. using the following?formula, Var left parenthesis Upper R Subscript p right parenthesis equals w Subscript 1 Superscript 2 Baseline SD left parenthesis Upper R 1 right parenthesis squared plus w Subscript 2 Superscript 2 Baseline SD left parenthesis Upper R 2 right parenthesis plus 2 w 1 w 2 Corr left parenthesis Upper R 1 comma Upper R 2 right parenthesis SD left parenthesis Upper R 1 right parenthesis SD left parenthesis Upper R 2 right parenthesis

VarRp=w21SDR12+w22SDR2+2w1w2CorrR1,R2SDR1SDR2?, and

b. calculating the monthly returns of the portfolio and computing its volatility directly.

c. How do your results?compare?

The following table contains monthly returns for Cola Corporation and Gas Corporation for 2012: E (The returns are shown in decimal form, i.e,, 0.035 is 35%) Using this table and the fact that Cola Corporation and Gas Corporation have a correlation of - Q0969, calculate the volatility (smndard deviation) of a portfolio that is 65% invested in Cola Corporation shares and 35% invested in Gas Corporation shares. Calculate the volatility by a. using the following formula, Var(Rp) = w? SD (R1 ) 2 + wSD (R2) + 2W1 w2 Corr(R1 ,R2) SD (R1) SD (R2) , and h. calculating the monthly returns of the portfolio and computing its volatility directly. c. How do your results compare