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Suppose for an agribusiness firm, the leverage ratio is 1. The rate of return on asset is normally distributed random variable with an average expectation

Suppose for an agribusiness firm, the leverage ratio is 1. The rate of return on asset is normally distributed random variable with an average expectation of 15%, and a standard deviation of 3%. The cost of borrowing is fixed at 10%, over the term of the loan, the tax rate is 25% and the consumption rate is 60%. Calculate the coefficient of variation for this agribusiness.

8%

1.8%

3%

5.6%

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