If a two-stock portfolio is equally invested in stocks with betas of 1.4 and 0.7, then the portfolio beta is:. A. 0.70.
B. 1.05.
C. 1.40.
D. 2.10.

Beta= 1.05

Explanation:

Giving the following information:

A two-stock portfolio is equally invested in stocks with betas of 1.4 and 0.7.

To calculate the Beta of the portfolio, we need to use the following formula:

Beta= (proportion of investment A*beta A) + (proportion of investment B*beta B)

Beta= (0.5*1.4) + (0.5*0.7)

Beta= 1.05

7.85%

Explanation:

12b-1 fees and management fees (annual expense ratio) represent the annual expenses that the mutual fund managers deduct from your gross returns.  

net return = gross return - annual expense ratio - 12b-1

if you want a net return ≥ 6.5% (given by a CD), then:

6.5% = gross return - 0.6% - 0.75%

gross return = 6.5% + 0.6% + 0.75% = 7.85%