Skippy is considering a new line of products to her potato business. She ponders about adding a line of chips which she calls "Le Chips". Skippy estimates that the most likely yearly incremental cash flow will be $26,000 but she is not sure. She had her financial manager estimate the potential cash flows for the new product line along with their associated probabilities of occurrence. The estimates are

If Skippy's other product lines on an average have a coefficient of variation of 14% what can we say about the risk of this product line relative to his other product lines

a. it is more risky

b. it has equal risk

c. it is less risky

d. cannot be determined from the information given

Probability of Occurrence 1% Cash Flows $20,000 $22,000 $24,000 $26,000 $28,000 $30,000 $32,000 12% 23% 28% 23% 12% 1%