General Meters is considering two mergers. The first is with Firm A in its own volatile industry, the auto speedometer industry, while the second is a merger with Firm B in an industry that moves in the opposite direction (and will tend to level out performance due to negative correlation).
General Meters Merger with Firm A General Meters Merger with Firm B
Possible Earnings Possible Earnings
($ in millions) ($ in millions)
Probability Probability
$ 40 .30 $ 40 .25
60 .40 60 .50
80 .30 80 .25
a. Compute the mean, standard deviation, and coefficient of variation for both investments. (Enter your answers in millions. Do not round intermediate calculations. Round "Coefficient of variation" to 3 decimal places and "Standard deviation" to 2 decimal places.)
Merger A Merger B
Mean
Standard Deviation _______ _______
Coefficient of Variation _______ _______