What Is the Beta for a Security Whose Returns Do

question 108

Multiple Choice

What is the Beta for a security whose returns do not vary across states of nature (a risk-free security) ?

• A) 0
• B) Between 0 and 1
• C) 1
• D) > 1
• E) < 0

---

Definitions:

Marginal Benefit

Marginal benefit is the additional satisfaction or utility received by consuming one more unit of a good or service.

Marginal Cost

The cost attached to the production of one additional unit of a good or service.

Competitive Market

A competitive market is one where there are many buyers and sellers so that no single buyer or seller can influence the price or terms of products.

Efficient Outcomes

Are results in which resources are allocated in the most effective manner, often relating to maximized welfare or minimized waste.