If an asset being considered for acquisition has a beta of zero, its expected return will be equal to the risk-free rate.

Question

Quizplus · Accepted Answer

If an asset has a beta of zero, it means it has no systematic risk and is not affected by market movements. In this case, the expected return of the asset will be equal to the risk-free rate, which is the return that an investor can achieve by investing in a risk-free asset such as a Treasury bill. Therefore, the statement is true.

If an Asset Being Considered for Acquisition Has a Beta