The Risk-Free Rate of Return Is 3% While the Market

question 67

Multiple Choice

The risk-free rate of return is 3% while the market rate of return is 12%. Delta Company has a historical beta of .85. Today, the beta for Delta Company was adjusted to reflect internal changes in the structure of the company. The new beta is 1.15. What is the amount of the change in the expected rate of return for Delta Company based on this revision to beta?

• A) 5.95
• B) 2.70%
• C) 3.75%
• D) 3.00%

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Definitions:

Input Phases

Different stages or steps in which resources, information, or materials are provided or entered into a system for processing.

Productivity Ratio

A measure of the efficiency of production or output in relation to input, typically expressed as output per unit of input.

Chocolate Factory

A facility where cocoa beans are processed and turned into various chocolate products.

Candy Produced

The quantity of confectionery items manufactured within a given timeframe, often measured for industry or individual business performance.