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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. Company Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company Correlation with Treynor Pie Company + 1.0 + 0.6 + 0.3 - 0.7 Sales ($ millions) $ 197 64 54 75 Expected Earnings ($ millions) $ 9 4 2 3 Standard Deviat in Earnings ($ millions) $ 4.0 1.3 1.8 3.2 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? Baby food company O Nutritional products company O Gourmet restaurant Treynor Pie Company a-3. Which company is the most risky? Treynor Pie Company O Baby food company Gourmet restaurant O Nutritional products company b. Which of the acquisition candidates is most likely to reduce Treynor Pie Company's risk
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