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You have an equity portfolio with a beta of 1.4 and a bond index portfolio with a beta of -0.23. Based on the current market

You have an equity portfolio with a beta of 1.4 and a bond index portfolio with a beta of -0.23. Based on the current market value of each portfolio the mix of the combined portfolio will be 60:40 equities to bonds. After combining these two portfolios, what is your expected return? Assume that the current T-Bill rate is 2% and the historic MRP is 5.1%.

A. 3.23%

B. 5.81%

C. 6.17%

D. 4.35%

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