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 Pe Company Gourmet restaurant Correlation with Treynor Sales (5 Pie Company millions) $ 164 Baby food company Nutritional products company +1.0 +0.7 +0.1 -0.8 Coefficient of Variation a-2. Which company is the least risky? 64 51 77 Expected Earnings ($ millions) 59 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. 6 Standardi Deviation in Earnings (5) millions) $ 3.0 1.4 1.7 3.1

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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
Treynot Pie Company
Gourmet restaurant
Correlation
with Treynor Sales ($
Pie Company millions)
$164
64
51
77
Baby food company
Nutritional products company
+1.0
+0.7
+0.1
-0.8
Coefficient of
Variation
a-2. Which company is the least risky?
Expected
Earnings ($
millions)
$9
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.
8
6
7
Standard
Deviation in
Earnings (5)
millions)
$ 3.0
1.4
1.7
3.1
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 Treynot Pie Company Gourmet restaurant Correlation with Treynor Sales ($ Pie Company millions) $164 64 51 77 Baby food company Nutritional products company +1.0 +0.7 +0.1 -0.8 Coefficient of Variation a-2. Which company is the least risky? Expected Earnings ($ millions) $9 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. 8 6 7 Standard Deviation in Earnings (5) millions) $ 3.0 1.4 1.7 3.1
a-2. Which company is the least risky?
O Nutritional products company
O Treynor Pie Company
Baby food company
O Gourmet restaurant
a-3. Which company is the most risky?
O Treynor Pie Company
O Gourmet restaurant
O Baby food company
Nutritional products company
b. Which of the acquisition candidates is most likely to reduce Treynor Pie Company's risk?
O Gourmet restaurant
O Nutritional products company
OBaby food company
Transcribed Image Text:a-2. Which company is the least risky? O Nutritional products company O Treynor Pie Company Baby food company O Gourmet restaurant a-3. Which company is the most risky? O Treynor Pie Company O Gourmet restaurant O Baby food company Nutritional products company b. Which of the acquisition candidates is most likely to reduce Treynor Pie Company's risk? O Gourmet restaurant O Nutritional products company OBaby food company
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