You are trying to get an idea of how predictable a firm future FCF’s will be...

You are trying to get an idea of how predictable a firm future FCF’s will be so you look at the last 10 years FCF’s and find that the average was 25 million and that the standard deviation was 18 million. You decide to find the range of outcomes 95% of the time. How should you interpret this?

a. The range of outcomes are from 7 to 43 million

b. The range of outcomes are from -11 to 61 million and the smaller the standard deviation the lower the total risk

c. The range of outcomes are from -11 to 61 million and the smaller the standard deviation the higher the total risk

d. The range of outcomes are from 5 to 45 million

Expert Solution

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