The Risk-Free Rate of Return Is 2% While the Market

question 48

Multiple Choice

The risk-free rate of return is 2% while the market rate of return is 12%.Parson 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 1.38.What is the amount of the change in the expected rate of return for Delta Company based on this revision to beta?

• A) 8.5%
• B) 10.5
• C) 12.2%
• D) 14.0%

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Definitions:

Blind Pane

The pane in the Johari Window that contains everything other people can see about you, but you can’t see yourself.

Johari Window

A model that is used to improve understanding between individuals within a group. It represents self-awareness and mutual understanding among individuals.

Managerial Grid

A framework for analyzing leadership styles by evaluating managers' concern for people versus their concern for production goals.

Johari Window

A model used to understand and improve self-awareness, interpersonal relationships, and group dynamics by dividing personal awareness into four quadrants: open, hidden, blind, and unknown.