6. Portfolio beta and weights Aa Brandon 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 tabie: Investment Allocation 35% 20% 15% 30% Standar Deviation 23.00% 27.00% 30.00% 34.00% Stock Atteric Inc. (AI) Arthur Trust Inc. (AT) Li Corp. (LC) Baque Co. (BC) Beta 0.900 1.600 1.200 0.300 Brandon calculated the portfolio's beta as 0.905 and the portfolio's expected return as 12.79%. Brandon 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 6%, and the market risk premium is 7.50%. According to Brandon's commendation, assuming that the market is in equilbrium, how much will the portfolio's required return change? O 1.96 percentage points O 1.82 percentage points O 1.58 percentage points O 1.23 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 2 8 2 4 6