Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Treynor Ple 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 transcribed
image text in transcribed
Treynor Ple 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 + 0.7 + 0.2 0.8 Company Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company Sales (5 millions) $ 104 64 52 74 Standard Deviation in Earnings (5 millions) $ 2.0 Expected Earnings ($ millions) $8 8 5 7 1.5 1.7 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? O Baby food company Treynor Ple Company O Gourmet restaurant O Nutritional products company a-3. Which company is the most risky? Treynor Pie Company O Gourmet restaurant O Nutritional products company O Baby food company b. Which of the acquisition candidates is most likely to reduce Treynor Ple Company's risk? O Baby food company O Gourmet restaurant O Nutritional products company

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

Enterprise Risk Management In Finance

Authors: David L. Olson, Desheng Dash Wu

1st Edition

1349691038, 978-1349691036

More Books

Students also viewed these Finance questions