2. The term volatility refers to how likely something is to change. A share's volatility is measured by the statistic beta. For Nintendo, beta = 0.40. For Sony, beta = 1.12 (Source: moneycentral. msn. com). The higher the value of beta to more likely the stock is to go up when the market is up and down when the market is down. The teen investor from (1) wants the share price volatility of her overall investment to be 1.00 or
less. Write then simplify an inequality for the share price volatility of the overall investment as a
function of the number of shares purchased in each company. You may find it helpful to use the
formula below.
(volatility of # 1)(shares of #1) + (volatility of #2)(shares of #2) = (overall volality) (total shares)