What is the beta of a coin flip?

The beta of an asset measures its sensitivity to market movements, indicating how much the asset's price is expected to change in relation to the overall market. In this context, a coin flip represents an outcome that has no correlation with market performance; its result is entirely random and unaffected by market trends.

When considering the beta of a coin flip, it will be zero, as it does not respond or correlate with any changes in the market. This lack of relationship suggests that regardless of the overall performance of the market, the outcome of a coin flip remains random and independent.

In contrast, other values such as 1, -1, or 0.5 would suggest some level of correlation with market movements, which does not apply to a simple random event like a coin flip, thus reinforcing the correct choice as zero beta.