The retailer has the option to invest in either venture A or venture B. Both ventures...

 

Transcribed Image Text:

The retailer has the option to invest in either venture A or venture B. Both ventures require an investment of £40,000. The net expected values and standard deviations for the two ventures are stated in Table 4 below. Table 4 - Outcomes Venture A Net EV = £48.0 Standard Deviation = £31.08 Venture B Net EV = £42.2 Standard Deviation = £14.32 1. Calculate the coefficients of variation for venture A and venture B. 2. Assuming the retailer is risk averse, which project should be chosen? The retailer has the option to invest in either venture A or venture B. Both ventures require an investment of £40,000. The net expected values and standard deviations for the two ventures are stated in Table 4 below. Table 4 - Outcomes Venture A Net EV = £48.0 Standard Deviation = £31.08 Venture B Net EV = £42.2 Standard Deviation = £14.32 1. Calculate the coefficients of variation for venture A and venture B. 2. Assuming the retailer is risk averse, which project should be chosen?

Answer rating: 100% (QA)

1 Coefficient of Variation COV S D mean SD standard deviation Mean e... View the full answer