1. The annual return of the shares of 3 companies are listed in the attached excel spreadsheet, Flowers Inc, Chocolates Inc and Wine Inc. What is the risk of an equally weighted portfolio of Chocolates Inc and Wine Inc, measured as the standard deviation of returns? Express your answer as a percentage to 2 decimal places, eg. 5.55.
2. Suppose the interest rate on bank deposits in New York is 4½% and the rate on similar deposits in Switzerland is 3½%. The current dollar price of a Swiss franc is $.6841, while the 2 one-year forward rate is $.6912. Does covered interest rate parity prevail? Does this mean that uncovered interest rate parity also holds? Explain.