Recalling the meaning and calculation of beta, a security that is completely uncorrelated with the market portfolio would have a beta of ___
Understand the Problem
The question is asking about the calculation and definition of beta in finance, specifically in relation to a security that has no correlation with the market portfolio, which would indicate its risk in comparison to the market.
Answer
0
A security completely uncorrelated with the market portfolio would have a beta of 0.
Answer for screen readers
A security completely uncorrelated with the market portfolio would have a beta of 0.
More Information
Beta is a measure of a security's volatility in relation to the market. If it is uncorrelated, this implies no relationship with market movements, thus a beta of 0.
Tips
A common mistake is confusing a beta of 0 with a negative beta or beta of 1, which indicate different relationships with market movements.
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