You live in an Eichlerbuilt house in Cupertino California. You admire Apple so much that it is the only stock that you want in your portfolio. You have $100,000 of your own money to invest and you intend to buy more Apple on margin by borrowing an additional $40,000. Your broker will lend to you at the risk free rate, 5%, and has guaranteed the lending rate for the duration of your investment. Apple's expected return is 12% and the expected return on the market is 8%. Apple's beta is 1.25. What beta do you expect from your portfolio?

1.45

1.75

1.55

1.25

1.65