You are an investor in common stock, and you currently hold a well-diversified portfolio which has a required return of 12%, a beta of 1.2, and a total value of $8,000. You plan to increase your portfolio by buying 200 shares of AT&E at $10 a share. AT&E has a beta of 1.8. The current T-bill rate is 3%.

What will be the required return of your portfolio after you purchase the new stock?

Select one:

a. 12.54%

b. 12.45%

c. 12.35%

d. 12.90%

e. 10.67%