If the beta function is negative and the required returns are also negative, it would indicate that the investment is underperforming compared to the market benchmark and the investor's expectations. This could be a red flag as it could mean that the investment is not generating enough returns to justify the risk taken.
In such a scenario, the investor may need to reassess their investment strategy and consider reallocating their portfolio to potentially lower risk or higher return investments. It could also be a sign to divest from the underperforming investment and seek better opportunities elsewhere.
Overall, having negative beta and required returns suggests that the investment is not meeting expectations and may require a reassessment of its viability in the investor's portfolio.
What happened if beta function is negative and required returns is also negative
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