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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 Correlation with Treynor Pie Company Standard Deviation in Earnings (S millions) $ 3.0 1.2 1.7 3.8 Sales Ex pected Earnings Company (S millions) (S millions) $ 9 Treynor PieCompany Gourmet restaurant Baby food company Nutritionalproducts company $ 182 63 54 75 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? Treynor Pie Company Gourmet restaurant Nutritional products company O Baby food company a-3. Which company is the most risky? O Treynor Pie Company OBaby food company Gourmet restaurant Nutritional products company b. Which of the acquisition candidates is most likely to reduce Treynor Pie Company's risk? Gourmet restaurant O Baby food company O Nutritional products company
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