Assume the Shelton Corporation is considering the acquisition of Cook Inc. The expected EPS for the Shelton Corporation will be $8.00 with or without the merger. However, the standard deviation of the earnings will decrease from $1.92 to $1.36 with the merger because the two firms are negatively correlated.

a. Calculate the coefficient of variation for the Shelton Corporation before and after the merger. (Round the final answers to 2 decimal places.)

	Coefficient of Variation
Premerger
Postmerger

b. Comment on the possible impact on Sheltons postmerger P/E ratio, assuming investors are risk averse.

Risk averse investors are being offered (Click to select) more less risk and may assign a (Click to select) lower higher P/E ratio to postmerger earnings.