Question: The CAPM states that the expected return on a security is positively and linearly related to its beta. It is a very useful model that

"The CAPM states that the expected return on a security is positively and linearly related to its beta. It is a very useful model that is used widely both in academia as well as market practice. However, as any other economic model, the CAPM is not revealed truth but, instead, a construct to be empirically tested and give some insights into what reality is." Comment on this statement by making reference to empirical tests for the validity of CAPM as well as alternative models and improvements for modelling asset prices.

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