The Beta for the Risk-Free Investment Is Closest To

question 3

Multiple Choice

The beta for the risk-free investment is closest to:

• A)1.
• B)0.
• C)Unable to answer this question without knowing the risk-free rate.
• D)Unable to answer this question without knowing the market's volatility.

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Definitions:

Savings Account

A bank account where money is kept for savings purposes and earns interest over time.

Stated Interest Rate

The annual interest rate declared on a bond or loan, not accounting for compounding or the effect of any fees.

Chi-square

A statistical test used to examine the differences between categorical variables in a contingency table.