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I need this question answered in less than one hour. This is all one question. Thank you. 6. Portfolio beta and weights Aa Aa Gregory

I need this question answered in less than one hour. This is all one question. Thank you. image text in transcribedimage text in transcribed

6. Portfolio beta and weights Aa Aa Gregory 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: TIT Investment Standard Stock Allocation Beta Deviation Atteric Inc. (AI) 35% 0.900 23.00% Arthur Trust Inc. (AT) 20% 1.400 27.00% Lobster Supply Corp. (LSC) 15% 1.200 30.00% aque Co. (BC) 30% 0.500 34.00% Gregory calculated the portfolio's beta as 0.925 and the portfolio's expected return as 12.94%. Gregory 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 6%, and the market risk premium is 7.50%. According to Gregory's recommendation, assuming that the market is in equilibrium, how much will the portfolio's required return change? 1.21 percentage points O 1.30 percentage points O 1.05 percentage points O 0.82 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, Gregory expects a return of 10.39% from the portfolio with the new weights. Does he think that the revised portfolio, based on the changes he recommended, is According to Gregory's recommendation, assuming that the market is in equilibrium, how much will the portfolio's required return change? O 1.21 percentage points 1.30 percentage points O 1.05 percentage points O 0.82 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, Gregory expects a return of 10.39% 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? OUndervalued O Fairly valued O Overvalued Suppose instead of replacing Atteric Inc.'s stock with Baque Co.'s stock, Gregory 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 increase decrease

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