A security that has a beta of zero will have an expected return of:
A) zero.
B) the market risk premium.
C) the risk free rate.
D) less than the risk free rate but not negative.
E) less than the risk free rate which can be negativE.

Question

Quizplus · Accepted Answer

A security with a beta of zero has no market risk and hence the expected return is only determined by the risk-free rate. Therefore, the expected return will be equal to the risk-free rate.

A Security That Has a Beta of Zero Will Have