True or False In the CAPM the market portfolio will have a B

True or False: In the CAPM, the market portfolio will have a Beta of 1.

Solution

True: In the CAPM, the market portfolio will have a Beta of 1.

The market portfolio benchmarked for beta comparison. The market portfolio consists of all types of securities which finally gives in market return.

As market portfolio is benchmark it is assigned beta of 1. A risky asset will have beta of more than 1 because it is less diversified than market.