Zero-Beta Portfolio

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Definition: Zero-Beta Portfolio

Zero-Beta Portfolio is a portfolio developed to have zero precise danger or, at the end of the day, a beta of zero. A zero-beta portfolio would have the same expected return as the danger free rate. Such a portfolio would have zero relationship with business sector developments, given that its normal return measures up to the danger free rate, a low rate of return.

A zero-beta portfolio is entirely unrealistic to pull in financial specialist enthusiasm for buyer markets , since such a portfolio has no business sector introduction and would accordingly fail to meet expectations an expanded business sector portfolio.

In a bear market, be that as it may, it may pull in some premium, albeit even in such a case, speculators are liable to address whether just putting resources into danger free, fleeting treasuries is a superior and less expensive different option for a zero-cost portfolio.


In other words, as per WAI, if there is lesser returnas compared to the cost of equity, the company is actually destroying shareholder value.


Hence, this concludes the definition of Zero-Beta Portfolio along with its overview.


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