Portfolio P has $200,000 consisting of $100,000 invested in Stock A and $100,000 in Stock B. Stock A has a beta of 1.2 and a standard deviation of 20%. Stock B has a beta of 0.8 and a standard deviation of 25%. Which of the following statements is CORRECT?
- Stock B has a higher required rate of return than Stock A.
- Portfolio P has a beta of less than 1.0.
- More information is needed to determine the portfolio's beta.
- Portfolio P has a beta of 1.0.