Question about covarince
Hello, everyone! I wonder whether anyone can help me with the following, because I struggle to find an answer:
Is covariansce of risk free asset with market portfio is zero?
Is covariansce of risk free asset with any risky asset is zero?
When i invest money into project and use CAPM for estimation of expected return I require a higher return if he risk is higher. But in which
circumstances I will prefer a lower expected return? Wheni have to pay to some one money back? Please provide some examples.
Thanks in advance!
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