Question

You receive a free ticket for a game of blackjack in your local casino. What is...

You receive a free ticket for a game of blackjack in your local casino. What is the beta of this asset?
Group of answer choicesThe beta is not defined.
None of the other answers are correct.
The beta is zero.
The beta is one.
The beta is smaller than zero.

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Answer #1

The beta is zero.

Beta is the systematic risk of an asset as compared to the entire market. A free ticket for a game of blackjack will have a beta of zero since it has no correlation with the market movements. The return on the asset is not correlated to the market returns.

Hence option 1 is incorrect since beta can be defined. Beta is not one since it does not move in the same proportion as the market. Beta is not smaller than zero as that would mean that the returns are inverse in relation to the market returns.

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