Your Mother's Well-Diversified Portfolio Has an Expected Return of 12

question 27

Multiple Choice

Your mother's well-diversified portfolio has an expected return of 12.0% and a beta of 1.20. She is in the process of buying 100 shares of Safety Corp. at $10 a share and adding it to her portfolio. Safety has an expected return of 15.0% and a beta of 2.00. The total value of your current portfolio is $9,000. What will the expected return and beta on the portfolio be after the purchase of the Safety stock?
Rp bp

• A) 11.69%; 1.22
• B) 12.30%; 1.28
• C) 12.92%; 1.34
• D) 13.56%; 1.41
• E) 14.24%; 1.48

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