Question
A stock has a current price of $50 and is expected to pay a dividend of $2 at the end of the year. The stock
A stock has a current price of $50 and is expected to pay a dividend of $2 at the end of the year. The stock is expected to grow at a rate of 5% per year. Calculate the expected total return for the stock. Now if investor is considering investing in a stock that has an expected return of 12%. The stock has a standard deviation of 20%. Calculate the Sharpe ratio of the stock.
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
