Do projects that add more risk to our portfolio need to provide more reward? Do projects that have high variance need to provide more reward? What asset has a beta of zero? What is the appropriate market rate of return for such a security? 2. Does CAPM takes care of default risk? Does the use of CAPM E(T) in the NPV formula takes care of the default risk? 3. What are the CAPM inputs? How would you estimate them? What is the appropriate risk-free rate in CAPM? 1. Do projects that add more risk to our portfolio need to provide more reward? Do projects that have high variance need to provide more reward? What asset has a beta of zero? What is the appropriate market rate of return for such a security? 2. Does CAPM takes care of default risk? Does the use of CAPM E(T) in the NPV formula takes care of the default risk? 3. What are the CAPM inputs? How would you estimate them? What is the appropriate risk-free rate in CAPM