A stock with a beta of zero would be expected to have a rate of return equal to the risk-free rate.

Here's why:

1. Beta is a measure of a stock's volatility in relation to the market. A beta of 1.0 indicates that the stock's price will move with the market. A beta less than 1.0 indicates the stock will be less volatile than the market, while a beta greater than 1.0 indicates the stock will be more volatile than the market.

2. A beta of zero, however, suggests that the stock's price is not at all correlated with the market. In other words, the stock's price does not tend to move up or down in response to changes in the market.

3. Therefore, the expected return on a stock with a beta of zero would be the risk-free rate. The risk-free rate is the return on an investment with zero risk, typically associated with short-term government bonds. This is because, in theory, an investor could achieve this return with no risk, so any investment should offer a potential return at least this high to compensate for its risk.

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A stock with a beta of zero would be expected to have a rate of return equal to the risk-free rate.

Here's why:

1. Beta is a measure of a stock's volatility in relation to the market. A beta of 1.0 indicates that the stock's price will move with the market. A beta less than 1.0 indicates the stock will be less volatile than the market, while a beta greater than 1.0 indicates the stock will be more volatile than the market.

2. A beta of zero, however, suggests that the stock's price is not at all correlated with the market. In other words, the stock's price does not tend to move up or down in response to changes in the market.

3. Therefore, the expected return on a stock with a beta of zero would be the risk-free rate. The risk-free rate is the return on an investment with zero risk, typically associated with short-term government bonds. This is because, in theory, an investor could achieve this return with no risk, so any investment should offer a potential return at least this high to compensate for its risk.

Knowee AI · Accepted Answer

A stock with a beta of zero would be expected to have a rate of return equal to the risk-free rate.

Here's why:

1. Beta is a measure of a stock's volatility in relation to the market. A beta of 1.0 indicates that the stock's price will move with the market. A beta less than 1.0 indicates the stock will be less volatile than the market, while a beta greater than 1.0 indicates the stock will be more volatile than the market.

2. A beta of zero, however, suggests that the stock's price is not at all correlated with the market. In other words, the stock's price does not tend to move up or down in response to changes in the market.

3. Therefore, the expected return on a stock with a beta of zero would be the risk-free rate. The risk-free rate is the return on an investment with zero risk, typically associated with short-term government bonds. This is because, in theory, an investor could achieve this return with no risk, so any investment should offer a potential return at least this high to compensate for its risk.

1 pointA stock with a beta of zero would be expected to have a rate of return equal to:

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