You hold a diversified portfolio consisting of a $6,000 investment in each of 20 different common stocks (i.e., your total investment is $120,000). The portfolio beta is equal to 1.22. You have decided to sell one of your stocks which has a beta equal to 1.31 for $6,000. You plan to use the proceeds to purchase another stock which has a beta equal to 1.85.

What will be the beta of the new portfolio?

Select one:

a. 1.38

b. 1.20

c. 1.13

d. 1.25

e. 1.11