The Delta Company Has a Capital Structure of 30% Risky

question 32

Multiple Choice

The Delta Company has a capital structure of 30% risky debt with a β of 1.1 and 70% equity with a β of 1.4. Their current tax rate is 30%. What is the β for Delta Company?

• A) 0.95
• B) 1.00
• C) 1.10
• D) 1.31
• E) 1.40

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Definitions:

Parity

The state or condition of being equal, especially regarding status or pay, or in finance, an equivalence in value or standing.

Agricultural Policy

A set of laws and regulations adopted by a government to control the agricultural sector's market, including prices, subsidies, and support for farmers.

Exchange Rate

The price at which the currency of one country can be exchanged for the currency of another country.

Bushel of Corn

A unit of measure for volumes of dry commodities, used especially for grain, equivalent to approximately 35.24 liters.