Question: An investor is forming a portfolio by investing $50,000 in stock A which has a beta of 1.50, and $25,000 in stock B which has a beta of 0.90. The return on the market is equal to 6 percent and Treasury bonds have a yield of 4 percent. What is the required rate of return on the investor's portfolio?
a. 6.6%
b. 6.8%
c. 5.8%
d. 7.0%
e. None of the answers above is correct.