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help !!!!! Brandon is an analyst at a wealth management firm. One of his clients holds a $10,000 portfollo that consists of four stocks. The
help !!!!!
Brandon is an analyst at a wealth management firm. One of his clients holds a $10,000 portfollo that consists of four stocks. The investment allocation in the portfollo along with the contribution of risk from each stock is given in the following table: Arandan calculated the portfollos beta as 0.840 and the portfolio's required return as 8.6200%. Brandon thinks it will bon a good itea to reallocate the funds in his dient's portfollo. He recommends replacing Atteric Incis shares with the same amount in additional thares of Bapue Co. The risk.free rate is 4%, and the market risk premium is 5.50%. Accorchng to Erandon'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.) (7) itifcentage points W.13ciz percontage points 0.2214 percentage points 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.) 0.2387 percentage points 0.1502 percentage points 0.2214 percentage points 0.1925 percentage points Analysts' estimates on expected returns from equity investments are based on several factors. These estimations also often include subjective and fudgmental factors, because different analysts interpret data in different ways. Suppose, based on the earnings consensus of stock analysts, Brandon expects a return of 9.93% from the portfolio with the new weights, Does he think that the required return as compared to expected returns is undervalued, overvalued, or fairfy valued? Undervalued Overvalued Eairly valued Suppote instead of replacite Atteric incis stock with Baque Co.'s stock, Brandon considers replading Atteric inc's stock with the equal dollar allocation to shates of Company X in stock that has a higher beta than Atteric inci. If everything else remains constant, the portfofio's risk would Step by Step Solution
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