Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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. Company Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company Correlation with Treynor Pie Company + 1.0 +0.4 + 0.4 -0.7 Sales ($ millions) $ 170 64 53 71 Expected Earnings ($ millions) $ 8 8 5 6 Standard Deviation in Earnings ($ millions) $ 2.0 1.3 1.8 3.6 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? Nutritional products company Treynor Pie Company Baby food company Gourmet restaurant a-3. Which company is the most risky? Nutritional products company Treynor Pie Company Gourmet restaurant Baby food company b. Which of the acquisition candidates is most likely to reduce Treynor Pie Company's risk? Gourmet restaurant Baby food company Nutritional products company
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started