Question: Relationship between Risk and Expected Return Is it possible that a risky asset could have a beta of zero? Explain. Based on the CAPM, what

Relationship between Risk and Expected Return Is it possible that a risky asset could have a beta of zero? Explain. Based on the CAPM, what is the expected return on such an asset? Is it possible that a risky asset could have a negative beta? What does the CAPM predict about the expected return on such an asset?

Can you give an explanation for your answer? Discuss the central predictions of the CAPM and give an overview of the empirical evidence.

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