Find Expected Values, Standard Deviations and Return to Risk Ratios

question 21

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 standard deviation in
Payoffs for hiring migrant workers is

• A) $21,651
• B) $12,990
• C) $5495
• D) $2500
• E) None of the above.

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Definitions:

Periodic Inventory System

An inventory accounting system where updates to inventory accounts occur at specific intervals, typically at the end of an accounting period.

LIFO

An inventory valuation method where the last items added to inventory are considered the first ones sold during a period of time; stands for Last-In, First-Out.

FIFO

An accounting method for inventory valuation where the first items acquired are the first ones sold, standing for First In, First Out.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency in managing stock levels.