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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.
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. Correlation with Treynor Sales ($ Pie Company millions). Expected Earnings (5 millions) +1.0 $ 182 $9 +0.5 +0.3 63 54 -0.6 75 Standard Deviation in Earnings ($ Company Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company a-1. Compute the coefficient of variation for each of the four companies. millions) $ 3.0 1.2 1.7 3.8 Note: Enter your answers in millions (e.g., $100,000 should be entered as "10"). Round your answers to 3 decimal places. Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company Coefficient of Variation a-2. Which company is the least risky? O Treynor Pie Company O Nutritional products company O Baby food company O Gourmet restaurant a-3. Which company is the most risky? O Baby food company O Treynor Pie Company O Gourmet restaurant O Nutritional products company b. Which of the acquisition candidates is most likely to reduce Treynor Pie Company's risk? O Baby food company O Gourmet restaurant O Nutritional products company
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