Esellance, a sale training company manager, believes that the economic state for the next year will be strong, normal, or weak and that the company’s returns will have the probability distribution presented below: State of economy. Probability of the state of economy. Rate of return Strong. 0,50 45% Normal 0,40 15% Weak 0,10 5% What is the coefficient of variation of the estimated returns? 1. 0,560 2. 0,584 3. 0,600 4. 0,620

Esellance, a sale training company manager, believes that the economic state for the next year will be strong, normal, or weak and that the company’s returns will have the probability distribution presented below: State of economy. Probability of the state of economy. Rate of return Strong. 0,50 45% Normal 0,40 15% Weak 0,10 5% What is the coefficient of variation of the estimated returns? 1. 0,560 2. 0,584 3. 0,600 4. 0,620

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter4A: Nopat Breakeven: Revenues Needed To Cover Total Operating Costs

Section: Chapter Questions

Problem 1EP

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Question

Question 3

State of economy. Probability of the state of economy. Rate of return

Strong. 0,50 45%

Normal 0,40 15%

Weak 0,10 5%

What is the coefficient of variation of the estimated returns?

1. 0,560

2. 0,584

3. 0,600

4. 0,620

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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