A share 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.
C)the prime rate.
D)the average AAA bond.
E)None of the above.

Question

Quizplus · Accepted Answer

A share with a beta of zero is considered to have no systematic risk, which means it is not affected by the movements in the market. Therefore, its rate of return is expected to be equal to the risk-free rate, which is typically the rate of return on government bonds.

A Share with a Beta of Zero Would Be Expected