however, the risks of private businesses do differ from those of traded securities. therefore, a portfolio of traded assets that best hedges the risk of typical private businesses will enjoy excess demand from private business owners. this will cause the price of the assets in this portfolio to be bid up relative to the price predicted by the capm ,causing a lower expected return in relation to systematic risk. conversely, securities with risks highly correlated to the risks of private businesses will have high equilibrium risk premiums, causing a higher expected return in relation to systematic risk; or positive alphas. this has been confirmed by empirical tests by heaton and lucas (2000). thus, private businesses can only be imperfectly hedged using traded securities and therefore still cause deviations from the capm.