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. Company Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company Correlation with Treynor Pie Company +1.0 +0.4 +0.4 -0.7 Coefficient of Variation a-2. Which company is the least risky? Traunar Din Campani O Nutritional products company O Baby food company O Gourmet restaurant Sales ($ millions) $ 170 a-1. Compute the coefficient of variation for each of the four companies. (Enter your answers in millions (e.g., $100,000 should be entered as "10"). Round your answers to 3 decimal places.) 64 53 71 Expected Earnings ($ millions) $8 5 6 Standard Deviation in Earnings ($ millions) $2.0 1.3 1.8 3.6
Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to diversify its food business and lower its risks. It is examining three companies-a gourmet restaurant chain, a baby food company, and a nutritional products firm. Each of these companies can be bought at the same multiple of earnings. The following represents information about all the companies. Company Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company Correlation with Treynor Pie Company +1.0 +0.4 +0.4 -0.7 Coefficient of Variation a-2. Which company is the least risky? Traunar Din Campani O Nutritional products company O Baby food company O Gourmet restaurant Sales ($ millions) $ 170 a-1. Compute the coefficient of variation for each of the four companies. (Enter your answers in millions (e.g., $100,000 should be entered as "10"). Round your answers to 3 decimal places.) 64 53 71 Expected Earnings ($ millions) $8 5 6 Standard Deviation in Earnings ($ millions) $2.0 1.3 1.8 3.6
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text: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.
Company
Treynor Pie Company
Gourmet restaurant
Baby food company
Nutritional products company
Treynor Pie Company
Gourmet restaurant
Baby food company
Nutritional products company
Correlation with
Treynor Pie
Company
+ 1.0
a-2. Which company is the least risky?
Traunar Din Company
+0.4
+0.4
-0.7
Coefficient of
Variation
O Nutritional products company
O Baby food company
O Gourmet restaurant
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.)
Sales
$ millions
$ 170
64
53
71
Expected Earnings
($ millions)
< Prev.
$8
8
5
6
8 of 8
Standard Deviation
in Earnings
($ millions)
$ 2.0
1.3
1.8
3.6
Next
14
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