Question: Use the following table to answer the question. Boom Normal Recession 20% 40% 20% Probability $30 mil $20 mil $10 mil CF (Wegmans $20 mil $20 mil $20 mil CF (Firm A) $60 mil $40 mil $20 mil CF (Firm B) $15 mil $10 mil 5 mil CF (Firm C) $20 mil $10 m $30 mil CF (Firm D) Wegmans' management is planning to acquire another firm to reduce cash flow volatility. Which firm is the best candidate for diversification? [Hint: You don't need to do any calculations. Just look at cash flows]
a. Firm A
b. Firm B
c. Firm C
d. Firm D