Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Chapter 8, Problem 8.7P

a)

Summary Introduction

To determine:

Coefficient of variation

Introduction:

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

b)

Summary Introduction

To determine:

Alternative recommended to minimize risk.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

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Industry is evaluating two different manufacturing systems (Alpha and Beta):           Possible Outcome Probability Rate of Return Alpha System Rate of Return Beta System Optimistic .35 .40 .15 Most likely .45 .25 .30 Pessimistic .20 (.10) (.20)   Which manufacturing system provides the lowest expected return? why? Alpha System Beta System Not enough information
Metal Manufacturing has isolated four alternatives for meeting its need for increased production capacity. The following table summarizes data gathered relative to each of these​ alternatives, Alternative Expected return Standard deviation A 21​% 7.9​% B 24​% 9.7​% C 17​% 6.2​% D 13​% 3.2​% a.  Calculate the coefficient of variation for each alternative. b.  If the firm wishes to minimize​ risk, which alternative do you​ recommend? ​ Why?
Coefficient of variation Metal Manufacturing has isolated four alternatives for meeting its need for increased production capacity. The following table summarizes data gathered relative to each of these alternatives, a. Calculate the coefficient of variation for each alternative. b. If the firm wishes to minimize risk, which alternative do you recommend? Why? a. The coefficient of variation for alternative A is (Round to three decimal places.)

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Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)

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