Assume the Knight Corporation is considering the acquisition of Day Inc. The expected EPS for the Knight Corporation will be $4 with or without the merger. However, the standard deviation of the earnings will go from $2.56 to $1.96 with the merger because the two firms are negatively correlated. [Note: Coefficient of Variation = Standard Deviation/Expected Value]
Compute the coefficient of variation for the Knight Corporation before and after the merger.