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%

---

Definitions:

Field analysis

A systematic examination of the context, stakeholders, and dynamics involved in a situation, often used to inform strategies or decisions.

Key parties

The main or most important individuals or groups involved in an event, situation, or decision-making process.

Closing the deal

The final actions or agreements required to conclude a business negotiation successfully.

Accommodation

A strategy where one party meets the needs of the other party at its own expense, often used to preserve future relations.