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

A beta of zero implies that the stock is not correlated with the market, which means that the risk of the stock is equal to the risk of the risk-free asset. Therefore, the required return on stock A will be equal to the risk-free rate of return.

If the Beta for Stock a Equals Zero,then