UPS, a delivery services company, has a beta of

1.6,

and Wal-Mart has a beta of

0.7.

The risk-free rate of interest is

6%

and the market risk premium is

8%.

What is the expected return on a portfolio with 50% of its money in UPS and the balance in Wal-Mart?

A.

16.7%

B.

18.2%

C.

15.2%

D.

14.4%