A stock with a beta of zero would be expected to have a rate of return equal to:
A)the risk-free rate.
B)the market rate of return.
C)the prime rate.
D)the market risk premium.
E)zero.

Question

Quizplus · Accepted Answer

A stock with a beta of zero means that it is not correlated with the market, and therefore its return is not affected by market movements. As a result, its expected rate of return would be equal to the risk-free rate.

A Stock with a Beta of Zero Would Be Expected