Find Expected Values, Standard Deviations and Return to Risk Ratios

question 12

Multiple Choice

Find expected values, standard deviations and return to risk ratios.
-A farm owner in upstate New York who grows summer vegetables (e.g. tomatoes)
Must decide whether to employ additional pickers this season. If he does, he could hire
Either migrant workers or local teenagers who need summer employment. The migrant
Workers are more experienced, faster, but more expensive. Although the teenagers will
Work for less, they lack experience and tend to damage plants and produce. His profits
Depend on the growing season as shown below. Suppose the farmer's almanac predicts
The probability of a good growing season this year to be .75. The return to risk ratio for
Hiring migrant workers is

• A) 8.40
• B) 4.05
• C) 2.89
• D) .346
• E) None of the above.

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Definitions:

Accounts Payable

Liabilities representing amounts owed by an entity to suppliers or creditors for goods and services received but not yet paid for.

Fees Earned

Revenue generated from providing services, as opposed to selling goods.

Capital

Financial assets or the financial value of assets, such as funds held in deposit accounts and/or funds obtained from special financing sources.

Debits

Accounting entries that increase assets or expense accounts, or decrease liability, equity, or revenue accounts.