Asked by
Vanessa Reyes
on Nov 03, 2024
Verified
What is the expected return of a zero-beta security?
A) The market rate of return
B) Zero rate of return
C) A negative rate of return
D) The risk-free rate
Zero-Beta Security
A financial instrument whose returns are not correlated with those of the market, meaning it has a beta of zero, thus not contributing to portfolio volatility.
Expected Return
The probability-weighted average of the possible outcomes.
- Identify the differences between systematic and unsystematic risks.
- Analyze stocks by predicting their performance relative to expectations set by the Capital Asset Pricing Model.
Verified Answer
KL
Learning Objectives
- Identify the differences between systematic and unsystematic risks.
- Analyze stocks by predicting their performance relative to expectations set by the Capital Asset Pricing Model.