Can someone pls explain me the followng:
Like how are these two things related to each other
An important characteristic of a factor in a factor‐based asset pricing model is whether the payoffs to the factor (i.e., the payoffs to assets with high exposures to that factor) are related to the marginal utility that investors derive from those payoffs. For example, the CAPM has as its single factor the return of the overall market. Clearly, investors derive higher marginal utility from payoffs when the market generates negative returns (i.e., “bad economic times”) than from payoffs received when markets are strong. A stock with a high beta generates great returns when wealth levels are high and poor returns when wealth levels are low. Declining marginal utility of wealth drives such undesirable assets (high beta assets) to require relatively high‐risk premiums.