9. Portfolio beta and weights Rafael is an analyst at a wealth management firm. One of his clients hoids a $10,000 portfolio that consists of four stocks. The investment allocation i the portfolio along with the contribution of risk from each stock is given in the following table: Rafael calculated the portfolio's beta as 0.845 and the portfolio's required return as 8.6475%. Rafsel thinks it will be a good idea to reallocate the funds in his client's portfollo. He recommends replacing Atteric incis shares with the same amouni in additional shares of Baque Co. The risk-free rate is 4%, and the market risk premlum is 5.50%. According to Rafael'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.) 0.3850 percentage points 0.3003 percentage points 0.4774 percentage points 0.4428 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, Rafael expects a return of 6.76% from the portfolio with the new weights. Does he thini that the required return as compared to expected returns is undervalued, overvalued, or fairly valued? Undervalued Overvalued Fairly valued Suppose instead of replacing Atteric Inc.'s stock with Baque Co.'s stock, Rafoel considers replacing Atteric Inc.'s stock with the equal dollar allocation t shares of Company X's stock that has a higher beta than Atteric Inc. If everything else remains constant, the required return from the portfolio would