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:

Dependent Variable

A variable in statistical modeling, experiments, or observations that is expected to change as a result of manipulations in the independent variable(s).

Independent Variables

Variables that are manipulated or categorically varied by researchers in an experiment to determine their effect on dependent variables.

Multicollinearity

Refers to a situation in statistics where independent variables in a regression model are highly correlated, potentially leading to difficulties in estimating the relationship between each independent variable and the dependent variable.

Independent Variables

Variables in an equation or model that are assumed to influence or cause changes in dependent variables.