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:

Test Statistic

A numerical value computed from a statistical test's sample data, used in hypothesis testing to determine whether to reject the null hypothesis.

Critical Value

A point on a statistical distribution that represents a threshold beyond which observations are considered to be statistically significant.

Two-Tailed Tests

Statistical hypothesis tests that consider the possibility of both positive and negative deviations from the null hypothesis.

Critical Values

Specific points on the scale of a statistical distribution that are compared with test statistics to determine whether to reject the null hypothesis.