Answered step by step
Verified Expert Solution
Link Copied!

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

image text in transcribedimage text in transcribed

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 + 1.0 + 0.6 + 0.2 -0.5 Company Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company Sales ($ millions) $ 162 66 57 74 Expected Earnings ($ millions) $10 Standard Deviation in Earnings ($ millions) $ 4.0 1.6 1.6 3.5 7 3 5 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? O Gourmet restaurant Treynor Pie Company O Baby food company O Nutritional products company a-3. Which company is the most risky? Nutritional products company Baby food company Gourmet restaurant O Treynor Pie Company b. Which of the acquisition candidates is most likely to reduce Treynor Pie Company's risk? Baby food company Gourmet restaurant Nutritional products company

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions