An example of a zero-beta asset is
A)the stock of a rapidly-growing Internet company,such as Yahoo!.
B)the stock of a mature company,such as General Motors.
C)a Treasury bill.
D)a thoroughly diversified portfolio of common stocks.

Question

Quizplus · Accepted Answer

A zero-beta asset has no correlation with the market, meaning its returns are not affected by changes in the overall market. Treasury bills are considered a zero-beta asset because their returns are not affected by stock market fluctuations. A and B are incorrect because they are both stocks, which have a positive beta and are affected by overall market movements. D is not necessarily a zero-beta asset as it depends on the specific stocks in the portfolio and their correlation with the market.

An Example of a Zero-Beta Asset Is