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Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to diversify its food business and lower its risks. It
Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to diversify its food business and lower its risks. It is examining three companies-a gourmet restaurant chain, a baby food company, and a nutritional products firm. Each of these companies can be bought at the same multiple of earnings. The following represents information about all the companies. Standard Deviation Correlation with Treynor Pie Company +1.0 Sales ($ millions) $ 189 Expected Earnings ($ millions) $ 8 Company Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company in Earnings ($ millions) $ 2.0 1.4 1.6 +0.4 63 7 57 4 +0.3 -0.5 76 5 3.3 a-1. Compute the coefficient of variation for each of the four companies. (Enter your answers in millions (e.g., $100,000 should be entered as "10"). Round your answers to 3 decimal places.) Coefficient of Variation Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company a-2. Which company is the least risky? O Baby food company Nutritional products company Gourmet restaurant Treynor Pie Company a-3. Which company is the most risky? Gourmet restaurant Nutritional products company Treynor Pie Company Baby food company b. Which of the acquisition candidates is most likely to reduce Treynor Pie Company's risk? Nutritional products company Baby food company Gourmet restaurant
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