All of the following questions remain to be answered in the real world EXCEPT
A) What is a good proxy for the market portfolio?
B) What happens when you cannot borrow or lend at the risk-free rate?
C) How good is the capital asset model as a predictor?
D) What is the beta of the market portfolio of risky assets?
E) What is the stability of beta for individual stocks?

Question

Quizplus · Accepted Answer

The beta of the market portfolio of risky assets is defined as 1. This is a foundational concept in finance, particularly in the Capital Asset Pricing Model (CAPM), which posits that the market itself has a beta of 1. This serves as a benchmark for comparing the risk and expected return of individual investments relative to the market as a whole.

All of the Following Questions Remain to Be Answered in the Real