Question: a. Given the following information, calculate the expected value for Firm Cs EPS. E(EPS A ) = $5.10 and A = $3.61; E(EPS B

a. Given the following information, calculate the expected value for Firm C’s EPS. E(EPS_A) = $5.10 and σ_A = $3.61; E(EPS_B) = $4.20 and σ_B = $2.96; and σ_C = $4.11.

Probability 0.1 0.2 0.4 0.2 0.1 Firm A: EPSA ($1.50) 1.80 S5.10

b. Discuss the relative riskiness of the three firms’ (A, B, and C) earnings.

Probability 0.1 0.2 0.4 0.2 0.1 Firm A: EPSA ($1.50) 1.80 S5.10 $8.40 $1.70 Firm B: EPS 1.20) 15 4.206.909.60 Firm C: EPSc 2.40) 1.35 5.10 8.85 12.60

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