If an asset being considered for acquisition has a beta of zero, its expected return will be equal to the risk-free rate.?
Answer the following statement true (T) or false (F)
True
Based on the capital asset pricing model (CAPM), Expected return (rproj) = Risk-free rate (rRF) + (Market return (rM) – Risk-free rate (rRF)) × Beta; if beta is zero, then the expected return will be equal to the risk-free rate. See 10-3: Incorporating Risk in Capital Budgeting Analysis
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Answer the following statement true (T) or false (F)
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What will be an ideal response?