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Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. You are in the process of buying 1,000 shares of Alpha Corp at $10 a share and adding it to your portfolio. Alpha has an expected return of 13.0% and a beta of 1.50. The total value of your current portfolio is $90,000. What will the expected return and beta on the portfolio be after the purchase of the Alpha stock?

A) 10.64%; 1.17

B) 12.97%; 1.42

C) 11.76%; 1.29

D) 12.35%; 1.36

E) 11.20%; 1.23

Basic Finance, Finance

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