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
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
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.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
C1 = 68100C2 =91200R = 45100
A ) Select the best project using Return on Investment ROI ( Rate of Return ) method the data of both projects are shown the table below.
B ) Compare the effect of decrease in revenues of Annual revenues of 5 % on the rate of return for project Y ( calculate the % of change in ROI ).
. Q....The target cost for one of the new ergonomically designed computer mice has beencalculated to be £4.50, which is 10% less than the actual cost currently achievable.The Board of Directors is considering providing some internal training to improveefficiency of labour, and hence reduce the cost gap. The current material cost is£1.40 per unit and this will not change as efficiency changes. Labour rates are £12per hour.To the nearest whole %, how much of an efficiency improvement (measured by the% reduction in labour time per computer mouse) is required remove the cost gapcompletely? Show all workings.
Ajmal LLC a company based in ibri, and its Project management team has recently been completed the sensitivity analysis of their upcoming project at Fahud. The following are the results of the sensitivity analysis.
i) Initial investment sensitivity margin is 15%,
ii) Sales volume sensitivity margin is 12%,
iii) Selling price sensitivity margin is 8%,
iv) Variable cost sensitivity margin is 3%,
You are required to identify which two of the above variables, the Ajmal LLC management should pay particular attention.
a.
ii & iii
b.
I & ii
c.
None of the options
d.
i & iv
Chapter 8 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 8.1 - What is risk in the context of financial decision...Ch. 8.1 - Prob. 8.2RQCh. 8.1 - Compare the following risk preferences: (a) risk...Ch. 8.2 - Explain how the range is used in scenario...Ch. 8.2 - Prob. 8.5RQCh. 8.2 - Prob. 8.6RQCh. 8.2 - What does the coefficient of variation reveal...Ch. 8.3 - What is an efficient portfolio? How can the return...Ch. 8.3 - Prob. 8.9RQCh. 8.3 - How does international diversification enhance...
Ch. 8.4 - Prob. 8.11RQCh. 8.4 - Prob. 8.12RQCh. 8.4 - Prob. 8.13RQCh. 8.4 - What impact would the following changes have on...Ch. 8 - Prob. 1ORCh. 8 - Prob. 8.1STPCh. 8 - Prob. 8.2STPCh. 8 - Prob. 8.1WUECh. 8 - Prob. 8.2WUECh. 8 - Prob. 8.3WUECh. 8 - Prob. 8.4WUECh. 8 - Prob. 8.5WUECh. 8 - Prob. 8.6WUECh. 8 - Prob. 8.1PCh. 8 - Prob. 8.2PCh. 8 - Prob. 8.3PCh. 8 - Prob. 8.4PCh. 8 - Prob. 8.5PCh. 8 - Learning Goal 2 P8-6 Bar charts and risk Swans...Ch. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Prob. 8.9PCh. 8 - Prob. 8.10PCh. 8 - Prob. 8.11PCh. 8 - Prob. 8.12PCh. 8 - Prob. 8.13PCh. 8 - Prob. 8.14PCh. 8 - Learning Goal 4 P8- 15 Correlation, risk, and...Ch. 8 - Prob. 8.16PCh. 8 - Learning Goal 5 P8- 17 Total, nondiversifiable,...Ch. 8 - Prob. 8.18PCh. 8 - Prob. 8.19PCh. 8 - Prob. 8.20PCh. 8 - Prob. 8.21PCh. 8 - Prob. 8.22PCh. 8 - Prob. 8.23PCh. 8 - Prob. 8.24PCh. 8 - Prob. 8.25PCh. 8 - Prob. 8.26PCh. 8 - Prob. 8.27PCh. 8 - Learning Goal 6 P8- 28 Security market line (SML)...Ch. 8 - Prob. 8.29PCh. 8 - Prob. 8.30PCh. 8 - Prob. 8.31PCh. 8 - Spreadsheet Exercise Jane is considering investing...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Contribution margin per constraint Using the data and your answers from MBA 12-2, determine the following: Assuming the selling price for Mirror glass cannot be changed, how much will the variable costs for Mirror glass need to be reduced so it is as profitable as Regular glass.arrow_forwardPROBLEM (5) (In a market with demand Q = 780 - p, there are 3 identical firms, A, B and C; each with a total cost function TC(Q) = 3Q2. Calculating the market price under each of the 5 scenarios below, rank/order the Consumer Surplus in each scenario (don’t calculate each CS; just rank them); (i) (See textbook’s Learning by Doing Exercise 13.2 on page 544 in 5th ed for Cournot competition with more than 2 firms) They compete in quantities with each other (Cournot-Nash equilibrium). (HINT: As you should find out, firms have the same MCs, hence the Best Response equations are symmetrical; hence there is a symmetric solution withqA=qB=qC astheCournot-Nashequilibrium) (ii) They collude as though they are all plants of the same single multi-plant monopoly. (iii) B and C act as two plants of a single multi-plant monopoly “B+C”, which competes in quantities (Cournot competition) against A. (iv) B and C jointly form the fringe supply and A is the dominant firm in the dominant firm model. (v)…arrow_forward1.Use the table below to answer the following questions. Resource Prices A B C Labor $5 5 4 3 Capital 10 2 3 5 Entrepreneur 20 1 1 1 Assume that a firm finds its profits will be maximized when it produces 50 units of product W (i.e., “widgets”). Three techniques shown in the table above will produce exactly 50 widgets. Which technique is the least expensive way of producing a widget? Suppose the firm chooses the least-cost method of production. If widgets sell for $2 each, what is the total economic profit of the firm?arrow_forward
- Contribution margin per constraint Using the data and your answers from MBA 12-2, determine the following: Assuming the selling price and variable costs for Laminated glass cannot be changed, how much will the furnace hours required for Laminated glass need to Ix- reduced to make it as profitable as Regular glass.arrow_forwardContribution margin per constraint Using the data and your answers from MBA 12-2, determine the following: The selling price necessary for Laminated glass to be as profitahle as Regular glass.arrow_forwardIf the cost for unit 100 in a unit theory learning curve scenario is $7.5M (FY15$), and the learning curve is 85.5%, what cost would you expect unit #400 to be? (disregard inflation) Show your work! (Hint: There is an easy way and a harder way to do this!) What cost would you expect unit #650 to be? (disregard inflation). (Yes, this should be done differently!)arrow_forward
- Q.Assume USA chooses to be environmentally responsible regardless of cost, and it switches to the new dye. The production manager suggests trying Kaizen costing. If USA can reduce fabric and labor costs each by 1% per month on all the shirts it manufactures, by how much will overall costs decrease at the end of 12 months? (Round to the nearest dollar for calculating cost reductions.) How could the reduction in material and labor costs be accomplished? Are there any problems with this plan?arrow_forwardIn a company, the development and project team faced two opportunities, and evaluated each opportunity based on basic criteria and the results were Table 2:1 Comparison between opportunity A and opportunity B Standards Standard weight opportunity A opportunity B Consistency with the company's vision. 0.2 5 4 the expected cost. 0.15 4 5 Increase market share. 0.05 4 4 expected return. 0.1 2 3 advanced technology. 0.05 2 4 Expected time to start production. 0.15 4 5 Legislative approval. 0.1 2 5 product price. 0.2 5 4 Note 1: The chance can take a score from 1 to 5 on each criterion Note 2: The weight of the criterion has the relative importance of each criterion compared to the other criteria Based on the result of the comparison, what is the opportunity that the company is supposed to work on? Preparing a Request for Proposals Document (RFP): Before discussing the method of preparing a…arrow_forwardNeed help figuring out part 2 of following question; I tried calculating it in excel but another student got a different answer, so I'm wrong. "If the company wishes to increase its total dollar contribution margin by 30% in 2020, by how much will it need to increase its sales if selling price per unit, variable price per unit and total fixed costs remain constant? total increase in sales required: ???"arrow_forward
- 1. Data: Lower control limit = 30, upper control limit = 33; overall sample mean = 31, standard deviation = 0.5. Calculate Cpk using z=3. Is the process capable? What is the Cpk? Yes, 1.33 No, 1.33 Yes, 0.67 No, 0.67 2. A machine costs $102,000 with a projected annual operating and maintenance cost of $10,000 and a salvage value of $36,000 after 3 years. If the cash flows are discounted annually at 12 percent what is the NPV? A. $2,361 B. -$100,378 C. -$121,987 D. -$48,271arrow_forwardQUESTION 31 Top management is trying to determine which would be the best choice of the following investment opportunities: Data of investment choices: 1 2 3 Sales $10,000,000 $9,000,000 $6,000,000 Operating income 200,000 300,000 300,000 Average operating assets 2,000,000 3,000,000 3,000,000 Minimum required rate of return = 8% Evaluate the three investment choices: Each investment choice has the same ROI, 10 percent. Choices 2 & 4 have a higher residual income then Choice 1, but that is to be expected given that they appear to be larger. Because residual income is an absolute measure, it should not be used to compare investment centers of different size. In general, larger investment centers should have larger residual incomes. Each investment choice has a different ROI. Choices 2 & 3 have a higher residual income then Choice 1, but that is to be expected given that…arrow_forwardAn investment center manager is considering three possible investments. The company’s required return is 10%. The required asset investment, controllable margins, and the ROIs of each investment are as follows: Project Average Investment Controllable Margin AA $170,000 $44,960 BB 150,000 29,240 CC 230,000 79,640 The investment center is currently generating an ROI of 23% based on $1,210,000 in operating assets and a controllable margin of $289,000.If the manager can select only one project, determine which is the best choice to increase the investment center’s ROI by computing the investment center’s ROI for each of the investment alternatives. (Round answer to 1 decimal place, e.g. 52.5.)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage LearningCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY