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Brandon calculated the portfolio's beta as 0.8725 and the portfolio's expected return as 8,80%. Brandon thinks it will be a good idea to reallocate the
Brandon calculated the portfolio's beta as 0.8725 and the portfolio's expected return as 8,80%. 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 4%, and the market risk premium is 5.5096. According to Brandon's recommendation, assuming that the market is in equilibrium, how much will the portfollo's required return change? (Note Round your intermediate calculations to two decimal places.) 0.48 percentage points 0.55 percentage points 0.37 percentage points 0.60 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, Brandon expects a return of 6.82% 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 valued? Overvalued Undervalued Fairly valued Suppose instead of replacing Atteric Incis stock with Baque Co.'s stock, Brandon considers replacing Atteric Incis 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 portfollo's bete would and the required return from the portfolio would
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