A stock with a beta of zero would be expected to:
A) Have a rate of return equal to zero
B) Have a rate of return equal to the market risk premium
C) Have a rate of return equal to the risk-free rate
D) Have a rate of return equal to the market rate of return

Question

Quizplus · Accepted Answer

A beta of zero means that the stock's returns aren't correlated with the market's returns. Therefore, the stock's rate of return won't be affected by changes in the market and will be equal only to the risk-free rate.

A Stock with a Beta of Zero Would Be Expected