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## How to find volatility of asset using two equation

Hi, I'm a Quantitative Sciences student and a first-time user of Mathcad.

As I do not have information on the asset volatility, I need to compute the value of asset volatility using two equations. However, the comment said that "The variable is undefined.."

May I know how to solve it? Thank you so much.

4 REPLIES 4

## Re: How to find volatility of asset using two equation

we outlined the steps as follows –

1. Calculate the average
2. Calculate the deviation – Subtract the average from the actual observation
3. Square and add up all deviations – this is called variance talktowendys
4. Calculate the square root of variance – this is called standard deviation.

## Re: How to find volatility of asset using two equation

Please check this Forum for examples of using a solve block with Prime (as it differs w.r.t. Mathcad 15 and before).

You can omit the "Given".

Move the constraint equations (E=.... and sigmaE*E=...) to the "Constraints" section of the solve block.

Provide a guess value for sigmaA  (sigmaA := <a value>) in the "Guess Values" section of the solve block.

Come back here, with your updated sheet if you've done the above and there's still a problem.

Then do not forget to state which version of Prime you are using.

Success!
Luc

## Re: How to find volatility of asset using two equation

You need a guess value for sigmaA.

And maybe I don't follow what you are trying to do, but the second equation by itself will lead you to a solution for sigmaA.  One equation one unknown.  (I suppose the first equation should do, but I get no solution found).

Given your setup both equations can't be satisfied with a single sigmaA.  Do you need to solve for a second variable also? Like this:

## Re: How to find volatility of asset using two equation

You've (perhaps) used "old" Mathcad.  Prime's solve blocks are a bit different"

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