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Hooper Chemical Company, a major chemical firm that uses such raw materials as carbon and petroleum as part of its production process, is examining a plastics firm to add to its operations. Before the acquisition, the normal expected outcomes for the firm are as follows:

	Outcomes ($ millions)	Probability
Recession.............................	$20	.30
Normal economy.................	40	.40
Strong economy..................	60	.30

After the acquisition, the expected outcomes for the firm would be:

	Outcomes ($ millions)	Probability
Recession.............................	$ 10	.3
Normal economy.................	40	.4
Strong economy..................	80	.3

Compute the coefficient of variation prior to the acquisition. Round your answer to 3 decimal places.

Additional Information for Problem 13-23

After the acquisition, these values are as follows:

Expected value........................................	43.0 ($ millions)
Standard deviation..................................	27.2 ($ millions)
Coefficient of variation...........................	.633

Does this acquisition appear desirable to you?

	A) Yes
	B) No

Do you think the firm's stock price is likely to go up as a result of this acquisition?

	A) Yes
	B) No

If the firm were interested in reducing its risk exposure, which of the following three industries would you advise it to consider for an acquisition?

	A) Chemical company
	B) Oil company
	C) Computer company

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