What Is the Expected Return of a Zero-Beta Security

question 143

Multiple Choice

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.
• E)None of the above.

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Definitions:

Amortizing

Amortizing involves gradually paying off a debt over time in regular payments that cover both principal and interest.

Indefinite Lives

Refers to intangible assets that do not have a predictable useful life, making their amortization over time inappropriate.

Patent Amortization Expense

The annual charge to expense over the useful life of a patent, representing the cost allocation of its value as an intangible asset.

Straight-Line Method

The straight-line method is a way of calculating depreciation by evenly spreading the cost of an asset over its useful life.