The CEO and CFO of Coral Gables Corp were having a discussion about which stock to buy
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Question:
The CEO and CFO of Coral Gables Corp were having a discussion about which stock to buy with the company\'s surplus cash. The CFO noted that it was important that the company incurs less risk for a given level of return and suggested using the Sharpe Ratio to choose between AMD and Intel. They both noted that the expected return on AMD in the next year is and the average return on INTC is , however the standard deviation on AMD is 0.13164 and on INTC is 0.11140. Assuming the risk-free rate is expected to be what are the Sharpe Ratios of AMD and INTC, and which is the better investment based on these ratios?
Related Book For
Cost Management Accounting and Control
ISBN: 978-0324559675
6th Edition
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan
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