If the beta for stock A equals zero,then
A) stock A's required return is equal to the required return on the market portfolio.
B) stock A's required return is equal to the risk-free rate of return.
C) stock A has a guaranteed return.
D) stock A's required return is greater than the required return on the market portfolio.

Question

Quizplus · Accepted Answer

If the beta for stock A equals zero, it means the stock is not correlated with the market. Therefore, the required return for the stock should be equal to the risk-free rate of return, which is the minimum return an investor should expect for taking on no risk.

If the Beta for Stock a Equals Zero,then