josuealejandro2208 josuealejandro2208

Today at 8:25 AM
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Answered

If the covariance of returns between a stock and the market equals zero, then what does the beta of the stock equal

Answer :

andromache andromache

Today at 8:31 AM

Answer:

a) Zero

Explanation:

As we know that

beta = Covariance (Stock return , Market return) ÷ market return variance

Now in the case when the covariance of return that lies between the stock and the market equivalent to zero so the beta of the stock would be zero

As if you divide by zero so the result would be zero

Therefore as per the given option, the option A is correct

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