Essentials of Corporate Finance
Essentials of Corporate Finance
8th Edition
ISBN: 9780078034756
Author: Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 15, Problem 15.5C
Summary Introduction

To think critically about: The situation that occurs if the initial public offerings are sold at a lower offering price and it is assumed that the offering is a firm commitment offering.

Introduction:

The private companies offer their stock for the first time to the public and this offering is termed as initial public offerings. The private companies that desire to become a publicly traded company usually offer initial public offerings.

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Congratulations! Your portfolio returned 16.7% last year, 2.5% better than the market return of 14.2%. Your portfolio had a standard deviation of earnings equal to 18%, and the risk-free rate is equal to 4.4%. Calculate Sharpe's measure for your portfolio. If the market's Sharpe's measure is 0.29, did you do better or worse than the market from a risk/return perspective? The Sharpe's measure of your portfolio is (Round to two decimal places.)
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