A potential venture investment has the following possible outcomes: A. What is the expected rate of return

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A potential venture investment has the following possible outcomes:        PROBABILITY OF OCCURRENCE PERFORMANCE OUTCOME RATE OF RETURN Home run (success) Breakeven Strikeout (failure) 0.15 500.0


A. What is the expected rate of return on the venture?
B. Calculate the variance and standard deviation of the rates of return for the venture.
C. Calculate the coefficient of variation of the rates of return for the venture. If the coefficient of variation of the rates of return for your prior venture investments is 4.0, would the new venture be considered as being less or more risky?

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Entrepreneurial Finance

ISBN: 978-1305968356

6th edition

Authors: J. Chris Leach, Ronald W. Melicher

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