1. A risk-free security is one with no uncertainty in its future payoffs. Hence, there is no volatility, and so the variance of its return is 0. According to the CAPM, is it possible that a security with a positive variance can have a required return that is less than the risk free rate? If so, explain what characteristics this asset needs to have and why this would mean an investor would accept a return less than the risk free rate when there is uncertainty in the assets future payoffs.