Your mother's well-diversified portfolio has an expected return of 12.0% and a beta of 1.20. She is in the process of buying 100 shares of Safety Corp. at $10 a share and adding it to her portfolio. Safety has an expected return of 19.0% and a beta of 2.50. The total value of your current portfolio is $9,000. What will the expected return and beta on the portfolio be after the purchase of the Safety stock?

Select the correct answer.

a. rp= 12.56%, bp= 1.27

b. rp= 12.63%, bp= 1.30

c. rp= 12.42%, bp= 1.21

d. rp= 12.49%, bp= 1.24

e. rp= 12.70%, bp= 1.33