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Choose the correct answer and explain briefly 8. What is the expected return of a zero-beta...

Choose the correct answer and explain briefly 8. What is the expected return of a zero-beta security? A. Market rate of retur

Choose the correct answer and explain briefly 8. What is the expected return of a zero-beta security? A. Market rate of return. B Zero rate of return. C. Negative rate of return. D. Risk-free rate of return 9. Capital asset pricing theory assets that portfolio returns are best explained by: A. Economic Factors B. Specific risk C. Systematic risk I D. Diversification 10. According to CAPM, the expected rate of return of a portfolio with a beta of 1.0 and an alpha of O is
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8)

D. Risk free rate of return

Beta represents the systematic risks of a security. A zero beta means there is no risk associated with the security. When the risk is zero, investors will earn the risk free rate of return. Risk rate of returns are returns generated on risk free assets such as treasury bonds. These bonds have no risk and therefore zero beta.  

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