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You own stock in 3M and you also own a risk-free asset (a U.S. t-bill). Assume...

You own stock in 3M and you also own a risk-free asset (a U.S. t-bill). Assume that the market risk premium is 9.3% and the return on the risk-free asset is 1.8%. 3M currently has a beta = 1.2. What is the beta of the market portfolio?

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Answer #1

Beta is the measure of change in return rate of stock with change in return rate of market index, so for market portfolio change in rate of return is equal to change in rate of return of index as market portfolio is made to immicate the market index.

Beta of Market Portfolio = 1

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