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Author Question: The risk-free rate of return is 3% while the market rate of return is 12%. Delta Company has a ... (Read 75 times)

Bobvance

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on: Mar 29, 2022

Question 1

The returns on small company stocks are 10.7%, U.S. Treasury bill offer a 1.3% return and a bank savings account offers an 0.8% return. What is the risk premium on small company stocks?
◦ 10.7%
◦ 9.4%
◦ 12.0%
◦ 9.9%

Question 2

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?
◦ 5.95
◦ 2.70%
◦ 3.75%
◦ 3.00%
Fundamentals of Investing ¦ Zutter, Smart ¦ 14th Edition
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Marked as best answer by Bobvance on Mar 29, 2022

Jim457

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Reply #1 on: Mar 29, 2022
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Bobvance

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Reply 2 on: Mar 29, 2022
Wow, this really help

chereeb

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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