Question
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 companiesa 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 | Correlation with Treynor Pie Company | Sales ($ millions) | Expected Earnings ($ millions) | Standard Deviation in Earnings ($ millions) |
---|---|---|---|---|
Treynor Pie Company | + 1.0 | $ 126 | $ 10 | $ 4.0 |
Gourmet restaurant | + 0.4 | 63 | 9 | 1.4 |
Baby food company | + 0.3 | 52 | 5 | 1.6 |
Nutritional products company | 0.7 | 77 | 7 | 3.2 |
a-1. Compute the coefficient of variation for each of the four companies.
Note: Enter your answers in millions (e.g., $100,000 should be entered as ".10"). Round your answers to 3 decimal places.
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