Suppose Stan holds a portfolio consisting of a $10,000 investment in each of 8 different common stocks. The portfolio's beta is 1.25. Now suppose Stan decided to sell one of his stocks that has a beta of 1.00 and to use the proceeds to buy a replacement stock with a beta of 0.70. What would the portfolio's new beta be?

Select the correct answer.

a. 1.11 b. 1.16 c. 1.21 d. 1.31 e. 1.26