Assignment:
RISK ANALYSIS
A. Given the following information, calculate the expected value for Firm C's EPS. Data for Firms A and B are as follows: E(EPSA) = $5.10, and sA = $3.61; E(EPSB) = $4.20, and sB = $2.96.
PROBABILITY
0.1 0.2 0.4 0.2 0.1
Firm A: EPSA ($1.50) $1.80 $5.10 $8.40 $11.70
Firm B: EPSB ($1.20) $1.50 $4.20 $6.90 $ 9.60
Firm C: EPSC ($2.40) $1.35 $5.10 $8.85 $12.60
B. You are given that sc = $4.11. Discuss the relative riskiness of the three firms' earnings.