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.
C) the prime rate.
D) the average AAA bond.
E) None of these.

Question

Quizplus · Accepted Answer

A stock with a beta of zero would imply that the stock's returns are not influenced by the market fluctuations. Therefore, the stock would be expected to have a rate of return equal to the risk-free rate, as it carries no systematic risk.

A Stock with a Beta of Zero Would Be Expected