Aa Aa 12. 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: Standard Investment Stock Allocation Beta Deviation Atteric Inc. (AI) 35% 0.750 23.00% Arthur Trust Inc. (AT) 20% 1.400 27.00% Li Corp. (LC) 15% 1.200 30.00% Baque Co. (BC) 34.00% 30% 0.500 Brandon calculated the portfolio's beta as 0.873 and the portfolio's expected return as 12.55%. 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 recommendation, assuming that the market is in equilibrium, how much will the portfolio's required return change? Q 0.52 percentage points Q 0.76 percentage points O 0.66 percentage points O 0.82 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