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: Investment Allocation 35% Beta 0.750 Standard Deviation 38.00% Stock Atteric Inc. (AL) Arthur Trust Inc. (AT) Corp. (LC) Transfer Fuels Co. (TF) 20% 1.400 42.00% 15.00% 15% 1.300 30% 0.500 49.00% Brandon calculated the portfolio's beta as 0.888 and the portfolios required return as 126600% Brandon thinks it will be a good idea to reallocate the funds in his client's portfolio. He recommends replacing Atterie Inc. shares with the same amount in additional shares of Transfer Fuels co. The risk free rates 6%, and the market risk premium is 7.50% According to Brandon's recommendation, assuming that the market inquilibrium, how much will the portfolio's required return change? (Note: Do not round your intermediate calculations.) 0.5148 percentage points 0.7590 percentage points 0.6600 percentage points 0.0184 percentage points Analysts estimates upected returns from eguity investment based on several factors. These estimations are often include subiective and O @ ** lo According to Brandon's recommendation, assuming that the market is in equilibrium, how much will the portfolio's required return change? (Note: De not round your intermediate calculations.) 0.5148 percentage points 0.7590 percentage points O 0.6600 percentage points O 0,8184 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 earings consensus of stock analysts, Brandon expects a return of 13.50% 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? Undervalued Fairly valued Overvalued Suppone tead of replacing Atteric Inc. stock with Transfer Fuels costock, Brandon considers replacing Atterie Inc's stock with the equal dollar allocation to shares of Company X4 stock that has a higher beta than Atteric Inc. If everything else remains constant, the required return from the portfolio would Grade it Now Save & Continue Continue without saving O T According to Brandon'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.) O 0.5148 percentage points 0.7590 percentage points 0.6600 percentage points O 0.8184 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 13.50% 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? Undervalued Fairly valued Overvalued decrease Suppose Instea Attenc Inc. stock with transfer Fuels costock, Brandon considers replacing Atteric Inc.'s stock with the equal dollar increase allocation to bany X's stock that has a higher beta than Atterie Inc. If everything else remains constant, the required return from the portfolio would Grade It Now Save & Continue Continue without saving T
