ABC Company holds a well-diversified portfolio in the amount of $90,000 that has an expected return of 11.0% and a beta of 1.03. It is buying 1,000 shares of DEF Company stock at $10 a share and adding them to its portfolio. DEF Company has an expected return of 13.0% and a beta of 1.41. Currently, the risk free rate is 3.5%, and the stock market return is 8.2%. What will the required rate of return on the new portfolio be after the purchase of DEF stock? (Hint: Compute a new portfolio beta first and then use the CAPM.)

Group of answer choices

a. 8.44%

b. 8.52%

c. 8.31%

d. 8.65%

e. 8.78%