If you plotted the returns of a given stock against those of the market, and if you found that the slope of the regression line was negative, the CAPM would indicate that the required rate of return on the stock should be less than the risk-free rate for a well-diversified investor, assuming that the observed relationship is expected to continue into the future.

Question

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In the Capital Asset Pricing Model (CAPM), a negative beta (slope of the regression line) suggests that the stock moves inversely to the market. If the beta is negative, the expected return according to CAPM could be less than the risk-free rate, as the stock is considered to reduce portfolio risk.

If You Plotted the Returns of a Given Stock Against