9. Portfolio beta and weights Gregory is an analyst at a wealth management firm. One of his clients holds a $10,000 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: Gregory calculated the portfolio's beta as 0.895 and the portfolio's required return as 8.9225%. Gregory thinks it will be a good ldea to reallocate the funds in his client's portfolio. He recommends replacing Atteric Inc.'s shares with the same amount in additional shares of Beque 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 portfollos required retum change? (Note: Do not round your intermediate calculations.) 1.1935 percentage points 1.1069 percentage points 0.9625 percentage points 0.7508 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 9.46% 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? Overvalued Undervalued Fairly valued Suppose instead of replacing Atteric Inc.'s stock with Baque Co.'s stock, Gregory considers reptacing 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 risk would