You Want Your Portfolio Beta to Be 1

Multiple Choice

You want your portfolio beta to be 1.20. Currently,your portfolio consists of $100 invested in stock A with a beta of 1.4 and $300 in stock B with a beta of .6. You have another $400 to invest and want to divide it between an asset with a beta of 1.6 and a risk-free asset. How much should you invest in the risk-free asset?

A) $0
B) $140
C) $200
D) $320
E) $400