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Portfolio P has $200,000 consisting of $100,000 invested in Stock A and $100,000 in Stock B. Stock A has a beta of 1.2 and a standard deviation of 20%. Stock B has a beta of 0.8 and a standard deviation of 25%. Which of the following statements is CORRECT? (Assume that the stocks are in equilibrium.) a. Portfolio P has a standard deviation of 22.5%. b. Portfolio P has a beta of 1.0. c. Stock B has a higher required rate of return than Stock A. d. More information is needed to determine the portfolio's beta. e. Stock A's returns are less highly correlated with the returns on most other stocks than are B's returns.

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