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Hamlet and his friends are undecided whether the ghost is real or whether it could be some agent of the devil or evil. As they discuss these possibilities, Marcellus suggests that it is wrong to inflict some sort of violence upon the ghost because it looks like a king--"majestical". Besides, trying to harm the ghost would do no good since it isn't vulnerable to anything that would harm a human being, such as a knife.
This is yet another example of how indecisive Hamlet is. It takes him some time to decide if the ghost is really his father.
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