Attempts Keep the Highest 1.5/3 12. Portfoliobeta and weights Bob 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: Bob calculated the portfolio's beta as 0.795 and the portfolio's expected return as 10.17%. Bob 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 5.00%, and the market risk premium is 6.50%. According to Bob's recommendation, assuming that the market is in equilibrium, how much will the portfolio's required return change? 0.84% 0.53% 0.78% 0.68% Analysts' estimates on expected returns from equity investments are based on several factors. These estimations afso oitten include subjective and judgmental factors, because different analysts interpret data in different ways. Bob calculated the portfolio's beta as 0.795 and the portfolio's expected return as 10.17%. Bob thinks it will be a good idea to reallocate the funds in his client's portfolio. He recommends repiacing Atteric Inc. 5 shares with the same amount in additional shares of Transfer Fuels Co. The risk-free rate is 5.00%, and the market risk premium is 6.50%. According to Bob's recommendation, assuming that the market is in equilibrium, how much will the portfolio's required return change? Analysts' estimates on expected returns from equity investments are based on several factors, These estimations also aften include subjective and judgmental factors, because different analysts interpret data in different ways. Suppose, based on the earnings consensus of stock analysts, Bob expects a return of 9.51% from the portfolio with the new weights. Does he think that the revised portfolio, based on the changes he recommended, is undervalued, overvalued, or fairly vaiued? Overvalued Fairly valued Undervalued Suppose instead of replacing Atteric Inc.'s stock with Transfer Fuels Co.'s stock, Bob considers replacing 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 required return from the portfolio would