Consider the Following to Answer the Question(s) Below

question 7

Essay

Consider the following to answer the question(s) below:
A landowner is considering a community development project. Even though he realizes that the current market for housing is not very favourable, he believes that there will be an influx of retirees into the area within the next five years. He is trying to decide between two alternatives: (1) building detached homes in a planned retirement community or (2) building a smaller townhouse/condominium complex. Mortgage interest rates will affect his outcomes and the applicable payoff (in $ millions) table is shown below.
-Compute the Coefficient of Variation for each action. If the landowner is risk averse, would the CV approach lead to the same choice as the expected value approach? Explain.

---

Definitions:

Negligence

Failure to take proper care in doing something, leading to damage or injury to another party.

Unconscionable

Describes something that is extremely unfair, unreasonable, or unethical, typically in the context of a contract or agreement.

Common Carrier

A service or company that is available to the public for transport of goods or people, under the regulation of governmental agencies.

Bailor

The person who temporarily transfers possession of property to another (the bailee) under a bailment agreement.