Question

Also, The volatility for Gas Co. is ___ % (Round to two decimal places.)

Month The following spreadsheet contains monthly returns for Cola Co. and Gas Co. for 2013. Using these data, estimate the average monthly return and the volatility for each stock. January February March April May June July August September October November December Cola Co. 9.40% 2.20% - 6.29% 7.40% -0.10% - 1.80% 0.10% 1.90% 0.50% - 1.50% 5.70% 5.80% Gas Co. - 3.00% -5.40% - 4.10% 0.40% -0.30% 0.40% - 2.50% - 2.10% 6.20% 2.50% 0.30% 0.60% The average monthly return for Cola Co. is 1.94 %. (Round to two decimal places.) The average monthly return for Gas Co. is - 0.58 %. (Round to two decimal places.) The volatility for Cola Co. is %. (Round to two decimal places.)

Thank you

Answer 1

Month	Returns
	coca cola (x)	gas co.(y)	x-a	y-b	(x-a)^2	(y-b)^2
jab	9.4	-3	7.46	-2.42	55.61	5.84
feb	2.2	-5.4	0.26	-4.82	0.07	23.20
mar	-6.29	-4.1	-8.23	-3.52	67.77	12.37
aprl	7.4	0.4	5.46	0.98	29.78	0.97
may	-0.1	-0.3	-2.04	0.28	4.17	0.08
jun	-1.8	0.4	-3.74	0.98	14.01	0.97
jul	0.1	-2.5	-1.84	-1.92	3.39	3.67
aug	1.9	-2.1	-0.04	-1.52	0.00	2.30
sept	0.5	6.2	-1.44	6.78	2.08	46.01
oct	-1.5	2.5	-3.44	3.08	11.85	9.51
nov	5.7	0.3	3.76	0.88	14.12	0.78
dec	5.8	0.6	3.86	1.18	14.88	1.40
total	23.31	-7			217.74	107.10
average monthly return	23.31/12	-7/12
	1.94	-0.58
Let expected return be named as	a	b
Standard deviation/volatility	[{(x-a)^2}/n]^(1/2)				=(217.74/12)^(1/2)	=(107.1/12)^(1/2)
					4.26	2.99
NOTE
n=no of months i.e.12
a=expected return of coca cola i.e.x
b=expected return of coca cola i.e.y

So volatility of gas co. is 2.99