One Would Expect a Stock with a Beta of Zero

question 6

Multiple Choice

One would expect a stock with a beta of zero to have a rate of return equal to

• A)zero.
• B)the market risk premium.
• C)the risk-free rate.
• D)the market rate of return.

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Definitions:

Net Capital

The difference between a firm's total assets and its total liabilities, essentially representing the owner's equity.

Net Capital Outflows

The difference between a nation's outflow of capital to foreign countries and its incoming capital from abroad, showing how much a country's residents are investing in foreign assets compared to how much foreigners are investing in the domestic country.

Deficit Change

The amount by which a government, company, or individual's spending exceeds income over a particular period of time.

Exchange Rate

The price of one country's currency expressed in terms of another country's currency.