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

question 17

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)5.3%
• C)12.2%
• D)14.0%

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Definitions:

Schizoid Personalities

Individuals characterized by a lack of interest in social relationships, a tendency towards a solitary lifestyle, and emotional coldness.

Cognitive-Behavioral Theorists

Scholars and practitioners who believe that psychological problems arise from faulty or negative thinking and behaviors, and that changing these can lead to improved mental health.

Emotional Cues

External or internal signals that indicate the emotional state of an individual or are meant to provoke an emotional response.

Schizoid Disorders

A cluster of mental conditions characterized by a long-standing pattern of detachment from social relationships and a limited range of emotional expression.