9. Portfolio beta and weights 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 table: Stock Atteric Inc. (AI) Arthur Trust Inc. (AT) Li Corp. (LC) Transfer Fuels Co. (TF) Investment Allocation 35% 1.1935 percentage points 0.9625 percentage points 1.1069 percentage points 20% 0.7508 percentage points 15% 30% Beta Standard Deviation 0.900 1.500 1.300 0.400 38.00% 42.00% Brandon calculated the portfolio's beta as 0.930 and the portfolio's required return as 9.1150%. 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 Transfer Fuels Co. The risk-free rate is 4%, and the market risk premium is 5.50%. 45.00% 49.00% According to Brandon'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.) 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.

9. Portfolio beta and weights 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 table: Brandon calculated the portfolio's beta as 0.930 and the portfolio's required return as 9.1150%. Brandon thinks it will be a good idea to realfocate the funds in his cllent's portfolio. He recommends replacing Atteric Incis shares with the same amount in additional shares of Transfer Fuels Co. The risk-free rate is 4%, and the market risk premlum is 5.50%. According to Brandon'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.) 1.1935 percentage points 0.9625 percentage points 1.1069 percentage points 0.7508 percentogo points Analysts' estimates on expected returns from equity investments are bosed on several foctors. These estimations also often include subjeftive and judgmental foctors, because different analysts interpret data in different ways. Analysts' estimates on expected returns fram equity investments are based on several factors. These estimations also often include subjective and fudgmentai factors, because different analysts interpret dote in different waysi 5uppose, based on the earnings consensus of stock analysts, Erandon expects a return of 9.65% from the portfolio with the new weights. Does he think that the required return as compared to expected returns is undervalued, owervalued, or fairly valued? Undervalued Overvalued Peirfy valued Suppose instesd of replacing Atteric Incis stock with Transfer Fueis Co's stock, Brandon considers replacing Arteric Inci'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 risk would