A Stock with a Beta of Zero Would Be Expected

question 72

Multiple Choice

A stock with a beta of zero would be expected to have a rate of return equal to:

• A)the prime rate.
• B)the average AAA bond.
• C)the risk-free rate.
• D)the market rate.
• E)None of the above.

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Definitions:

Substitutes

Goods or services that can be used in place of one another, where an increase in the price of one leads to an increase in demand for the other.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at various prices.

Price

The amount of money required to purchase a good or service, determined by factors such as demand and supply.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded, typically downward sloping, reflecting price sensitivity.