1. What would not be true about a GNP beta?
a. If a stock's b GNP = 1.5, the stock will experience a 1.5% increase for every 1% surprise increase in GNP.
b. If a stock's b GNP = -1.5, the stock will experience a 1.5% decrease for every 1% surprise increase in GNP.
c. It is a measure of risk.
d. It measures the impact of systematic risk associated with GNP.
e. None of the other answers.
2. A security that has a beta of zero will have an expected return of:
a. Zero.
b. The market risk premium.
c. The risk free rate.
d. Less than the risk free rate but not negative.
e. Less than the risk free rate which can be negative.