Is it possible for an asset to have a negative beta? (Hint: yes) What would the expected return on such an asset be? Why?

While it is unlikely to observe a negative beta asset, it would have less systematic risk than the risk-free asset and would be expected to provide an even lower return. One possibility often cited is that of gold. The return would be less than the risk-free rate because, while the risk-free rate is determined by changes in inflation and the business cycle for the economy at large, gold, as an ultimate store of value, is not affected by these factors (at least to the same degree).