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Stocks with a beta of zero offer an expected rate of return

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Are the following statements true or false? Explain.
a. Stocks with a beta of zero offer an expected rate of return of zero.
b. The CAPM implies that investors require a higher return to hold highly volatile securities.
c. You can construct a portfolio with a beta of 0.75 by investing 0.75 of the budget in T-bills and the remainder in the market portfolio.

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The solution provides explanations and answer for the problem. The stocks with a beta of zero offers an expected rate of return.

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a. False. Stocks with zero beta offers the risk free rate.
b. False. Investors require a risk premium only for bearing ...

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