26. You own a portfolio which is invested equally in two stocks and a risk-free security. The stock betas are .89 for Stock A and 1.26 for Stock B. Which one of the following will increase the portfolio beta, all else constant?

increasing the amount invested in the risk-free security

decreasing the weight of Stock B and increasing the weight of Stock A

replacing Stock A with a security that has a beta of .77

increasing the weight of Stock A and decreasing the weight of the risk-free security

replacing Stock B with Stock C, which has a beta equal to that of the market

27. Where will a security plot in relation to the security market line (SML) if it has a beta of 1.1 and is overvalued?

to the right of the overall market and above the SML

to the right of the overall market and below the SML

to the left of the overall market and above the SML

to the left of the overall market and below the SML

on the SML