3. (Answer in 6-10 sentences.) Risk-averse investors won't invest in capital assets of greater risk unless these asset have greater expected returns. In Chapter 11, we saw several measures of an asset's risk but only one risk measure related to the asset's expected return. Explain i) how a single capital asset's risk relates to the asset's expected return according to the capital asset pricing model; i) how this relationship is derived, and ii) the forces at work to make this relationship hold