Question

The risk-free security has a beta equal to, while the market portfolio's
beta is equal to:
(i) one; more than one (ii) one; less than one (iii) zero; one (iv) less
than zero; more than zero
value

MCQ ​

Answer 1

Answer:

The risk-free security has a beta equal to zero while the market portfolio's beta is equal to one.

Answer 2

The risk-free security has a beta equals to zero, while the market portfolio's beta is equal to one.

Explanation:

• Greater is the value of beta, more is the unavoidable risk of security.
• Therefore, risk-free security has beta equals to zero, which indicates less volatility.
• If a portfolio's volatility matches the market volatility then beta is equaled to 1.
• Hence, Rish-free security has beta equals to zero, while the market portfolio's beta is equal to one.
• The correct option is an option (iii)