The Beta for an Asset Considered to Be Risk-Free

question 116

Multiple Choice

The beta for an asset considered to be risk-free

• A) can be any positive number.
• B) is negative.
• C) equals zero.
• D) equals 1.

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Definitions:

Normative Model

An approach or theory that prescribes how individuals should behave or make decisions, based on established norms or standards.

Expected Utility

A concept in economics and game theory that quantifies the utility expected from an uncertain prospect or decision.

Recognition-Primed Decision-Making

A model of how people make quick, effective decisions based on their expertise and past experiences.

Mental Simulation

The cognitive process of imagining or projecting oneself into different scenarios or situations to forecast outcomes or understand phenomena.