The reasoning that had led Sharpe, Treynor, Linter, and Mossin to the Capital Asset Pricing Model was sophisticated. However, the model predicted an equilibrium relationship between an asset's beta and its expected return that was simplicity itself. (See figure 2.2.) An asset with a beta of zero has no correlation to the market as a whole, so any specific risk in holding such an asset can be eliminated by diversification. Hence, the asset can be expected to yield only the riskless rate of interest: the rate an investor could earn by holding until its maturity an entirely safe asset such as a bond issued by a major government in its own currency. As beta and thus market risk rises, so does expected return, in a direct straight-line relationship.

Donald MacKenzie, An Engine, Not a Camera, loc. 254