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8. 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 imvestment allocation in the portfolio algng wath the contribution of risk from each stock is given in the following table: Brandon calculated the portfolio's beta as 0.818 and the portfolio's required return as 8.4990%. Brandon thinks it wilf be a good idea to reallocate the funds in his client's portfolio. Me 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 premilum is 5.50%. According to Brandon's recommendation, assuming that the market is in equilibrium, how much will the portiolio's required return change? (Note: Do not round your intermediate calculations.) 0.6778 percentage points 0.8690 percentage points 0.9994 percentage points 1.0776 percentage points Branden calculated the portfolio's beta as 0,818 and the portfolio's required return as 8.4990%. Brandon thinks it will be a good idea to reallocate the funds in his client's portfolio. He recemmends replacing Atteric Incis shares with the same amount in additional shares of Baque C0. The risk-free rate is 4%, and the market risk premium is 5.50%. According to Branden's recommendation, assuming that the market is in ecullibrium, how much will the pertfolie's required return change? (Note: Do not round your intermediate calculations.) 0.6778 percentage points 0.8690 percentage points 0.9994 percentage points 1.0776 percentage points Analysts' estimstes on expected retums from equity imvestments are based on several factors. These estimations also often include subjective and judgmental factors, because dderent analysts interpeet data in different ways. Suppose, based on the earnings consensus of stock analysts, Brandon expects a retum of 6.13% from the portfolio weth the new weights. Does he think that the required return as compared to expected returns is undervalued, orvervalued, or fairly valued? Overvalued Fairfy valued Undervalued Suppose instead of replacing Atteric Inc.'s stock with Baque Co.'s stock, Brandon considers replacing Atteric Inc.'s stock with the equal dollar allocation to shares of Company Xis stock that has a higher beta than atteric Inc, If everything eise remains constant, the portfolio's beta would