You compute the portfolio weighted average return and beta for a properly diversified portfolio as follows:

WA return= 9%

WA beta= 1.2

Given the above, choose the best answer:

Select one:

a. Sell the stocks with low betas and high returns.

b. Sell the stocks with high betas and low returns.

c. Replace as many stocks as necessary to achieve a proper balance of risk and return.

d. Add BBB rated bonds into the portfolio to reduce the impact of the risk of the stock market.

e. Any of the above choices will achieve the desired results.