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Question
You are an investor in common stock, and you currently hold a well-diversified portfolio which has an expected return of 12 percent, a beta of 1.2, and a total value of $9,000. You plan to increase your portfolio by buying 100 shares of AT&E at $10 a share. AT&E has an expected return of 20 percent with a beta of 2.0. What will be the expected return and the beta of your portfolio after you purchase the new stock?
a. 
= 20.0%; u03b2p = 2.00
b. = 12.8%; u03b2p = 1.28
c. = 12.0%; u03b2p = 1.20
d. = 13.2%; u03b2p = 1.40
e. = 14.0%; u03b2p = 1.32
Answer
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