Question

Possible outcomes for three investment alternatives and their probabilities of occurrence are given below.

	Alternative 1							Alternative 2							Alternative 3
	Outcomes			Probability				Outcomes			Probability				Outcomes			Probability
Failure	$	30			0.10			$	80			0.20			$	110			0.30
Acceptable		70			0.50				195			0.40				350			0.50
Successful		105			0.40				250			0.40				400			0.20

Rank the three alternatives in terms of least risk to most risk. (Do not round intermediate calculations. Round the final answers to 3 decimal places.)

Rank	Coefficient of Variation
(Click to select)  Alternative 2  Alternative 1  Alternative 3
(Click to select)  Alternative 2  Alternative 1  Alternative 3
(Click to select)  Alternative 2  Alternative 1  Alternative 3

Answer 1

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STATS -Microsoft Excel (Product Activation Failed) Home Review File Insert Page Layout Formulas Data View Add-Ins Σ AutoSum - Cut AS Wrap Text Calibri 11 General ECopy Fill Insert Delete Format Sort & Find & Filter Select Paste +.0 .00 .00 0 Conditional Format Cell BIU % a Merge & Center Format Painter Clear Formatting as Table Styles Clipboard Font Alignment Number Styles Cells Editing f&x CN468 CK CP CJ CL CM CN CO 451 452 453 454 ALTERNATIVE 1 455 prob OUTCOMES EXPECTED VARIANCE 456 PROB* (R -E(R ))^2 (R) OUTCOMES 457 A*B В 458 FAILURE 0.1 30 3 250 459 ACCEPTABLE 0.5 70 35 50 SUCCESSFUL 460 0.4 105 42 250 EXPECTED OUTCOME = E(R ) = 461 80 V(R) 462 550 SD (R) 463 23.45 464 expected cash flow 80 465 a b 23.45 466 STANDARD DEVIATION = COEFFICIENT OF VARIATION= SD(R )/E(R) = 467 0.293 C 468 469 470 471 EMV MEAN STDV HYPOTHI assignment Sheet2 TREND freq COV corr REGRESSION INTERVAL, NORMAL PV FV DIVIDEND DEAR TIME SERIES MATRIX range CAMERA Rea erences 120% 13:35 ENG 07-11-2019

STATS -Microsoft Excel (Product Activation Failed) Review File Home Insert Page Layout Formulas Data View Add-Ins Σ AutoSum - Cut A A Wrap Text Calibri 11 General Copy Fill в IU* Insert Delete Format Paste +.0 .00 .00 .0 Conditional Format Cell Sort & Find & Filter Select % aMerge & Center Format Painter Clear Formatting as Table Styles Clipboard Font Alignment Number Styles Cells Editing fox CL450 СР CJ СК CL СМ CN CO 432 433 434 ALTERNATIVE 2 435 prob VARIANCE OUTCOMES EЕXPECTED OUTCOMES 436 (R) PROB*(R -E(R)^2 437 A*B A В FAILURE 438 0.2 80 16 2599.2 439 АССЕРТАВLE 0.4 195 78 0.4 440 250 1254,4 SUCCESSFUL 0.4 100 EXPECTED OUTСOME: EXPECTED OUTCOME E(R ) = 194 441 442 V(R)= 3854 SD (R) 443 62.08 444 expected cash flow 445 194 а b 446 STANDARD DEVIATION = 62.08 COEFFICIENT OF VARIATION= SD(R)/E(R) = 447 0.320 C 448 449 450 451 452 EMV MEAN STDV HYPOTHI assignment Sheet2 TREND freq COV corr REGRESSION INTERVAL, NORMAL PV FV DIVIDEND DEAR TIME SERIES MATRIX range CAMERA Rea erences 120% 13:35 ENG 07-11-2019

STATS -Microsoft Excel (Product Activation Failed) Review File Home Insert Page Layout Formulas Data View Add-Ins E AutoSum - Cut A A Wrap Text Calibri 11 General Copy Fill в IU- Merge & Center $ % Insert Delete Format Paste +.0 .00 .00 .0 Conditional Format Cell Sort & Find & Filter Select Format Painter Clear Formatting as Table Styles Clipboard Font Alignment Number Styles Cells Editing fox CO428 СР CJ СК CL CM CN CO 412 ALTERNATIVE 3 413 prob 414 OUTCOMES EXPECTED VARIANCE 415 (R) PROB*(R -E(R))^2 OUTCOMES 416 A*B В 417 FAILURE 0.3 110 33 9505.2 418 АССЕРТАВLE 0.5 350 175 1922 419 SUCCESSFUL 0.2 400 80 2508.8 EXPECTED OUTCOME = E(R ) = 288 420 V(R) 421 13936 SD (R) 118.05 422 423 expected cash flow 424 288 425 STANDARD DEVIATION = 118.05 COEFFICIENT OF VARIATION= SD(R )/E(R) 426 0.410 427 428 COEFFICIENT OF VARIATION RANK 429 RANKS ALTERNATIVE 1 0.293 1 430 ALTERNATIVE 2 0.320 2 431 ALTERNATIVE 3 0.410 3 432 EMV MEAN STDV assignment HYPOTHI DEAR Sheet2 TREND freq COV INTERVAL, NORMAL PV FV DIVIDEND TIME SERIES corr REGRESSION MATRIX range CAMERA Rea erences 120% 13:36 ENG 07-11-2019