Just two finance questions.

Forecasting Exercise Name ________________________

Consider the following probability distribution for losses for your firm:

.20 300

.30 200

.40 100

.10 5,000

1. Calculate the:

1. 1. Expected Value of Losses

1. 1. Variance

1. 1. Standard Deviation

1. 1. Coefficient of Variation

1. A risk manager of a multi-location bicycle shop determined that over the past 10 years, the firm suffered the following annual theft losses to inventories of bicycle tires:

Years 1 $ 15,000

Years 2-4 $ 2,000

Year 5-6 $ 30,000

Years 7-10 4,000

Calculate the : a) mean or expected loss

b) Standard deviation

c) Coefficient of variation

d) In what range should theft losses fall 99 percent of the time?