If an Asset Being Considered for Acquisition Has a Beta

question 27

True/False

If an asset being considered for acquisition has a beta of zero, its expected return will be equal to the risk-free rate.

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Definitions:

Government Spending

The total amount of money spent by the government on various services, infrastructure projects, and welfare programs.

Marginal Propensity

A measure of how much an individual's or household's consumption changes when their income changes by one unit.

Multiplier

In economics, it refers to the factor by which gains in total output are greater than the change in spending that caused it, often associated with fiscal policy.

Interest-earning Assets

Assets owned by a person or corporation that generate interest income.