4. Portfolio beta and weights Gregory is an analyst at a wealth management firm. One of his clients holds a $5,000 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table: Stock Investment Allocation Beta Standard Deviation Atteric Inc. (AI) 35% 0.600 38.00% Arthur Trust Inc. (AT) 20% 1.600 42.00% Lobster Supply Corp. (LSC) 15% 1.200 45.00% Baque Co. (BC) 30% 0.300 49.00% Gregory calculated the portfolio's beta as 0.800 and the portfolio's required return as 8.4000%. Gregory thinks it will be a good idea to reallocate the funds in his client's portfolio. He recommends replacing Atteric Inc.'s shares with the same amount in additional shares of Baque Co. The risk-free rate is 4%, and the market risk premium is 5.50%. According to Gregory's recommendation, assuming that the market is in equilibrium, how much will the portfolio's required return change? (Note: Do not round your intermediate calculations.) O 0.5775 percentage points 0.4505 percentage points O 0.7161 percentage points O 0.6641 percentage points O 0.5775 percentage points O 0.4505 percentage points O 0.7161 percentage points O 0.6641 percentage points Analysts' estimates on expected returns from equity investments are based on several factors. These estimations also often include subjective and judgmental factors, because different analysts interpret data in different ways. Suppose, based on the earnings consensus of stock analysts, Gregory expects a return of 6.32% from the portfolio with the new weights. Does he think that the required return as compared to expected returns is undervalued, overvalued, or fairly valued? O Overvalued O Fairly valued O Undervalued Suppose instead of replacing Atteric Inc.'s stock with Baque Co.'s stock, Gregory considers replacing Atteric Inc.'s stock with the equal dollar allocation to shares of Company X's stock that has a higher beta than Atteric Inc. If everything else remains constant, the portfolio's beta would Grade It Now Save & Continue Continue without in