Market Portfolio:
A market portfolio refers to a kind of portfolio that comprises of several risky investments, with each individual investment in portfolio weighted in proportion to its value. Such portfolios consist of all outstanding shares of all the risky securities.
A market portfolio can also be referred to as a theoretical bundle of investments comprising of all the assets available in the financial market. The expected return of a market portfolio is same as the expected return of a market as a whole.
Beta implies the change in percentage in the excess return of a particular security for 1% change in the excess return of a market portfolio or a benchmark portfolio.
To ascertain: The relevancy of beta
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