Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help with all 3 questions Brandon is an analyst at a wealth management firm. One of his clients holds a $7,500 portfolio that consists

please help with all 3 questions
image text in transcribed
image text in transcribed
image text in transcribed
Brandon is an analyst at a wealth management firm. One of his clients holds a $7,500 portfolio that consists of four stocks. The mestment allocation in the portfolio along with the contribution of risk trom each stock is given in the following table: Stock Attric Inc. (AT) Arthur Trust Inc. (AT) u Corp. (LC Transfer Fuels Co.) Investment Allocation Beta Standard Deviation 0.750 38.00% 204 1.600 42.00% 159 1.100 45.00 30 0.300 49.00% Brandon calculated the portfoto's beta 0.838 and the portfoto's required return 6.000 Brandon think it will be a good idea to relocate the funds in his cents portfolio. He recommends replacing Attarie Inc.'s shares with the same amount in additionat shares of Transfer Fuels Co. The risk-free rate 45 and the marketeisk premium is 5.50% According to Brandon recommendation, assuming that the market is in eculibrum, how much will the portfolio's required return change? (Note: Do not round your intermediate calculations.) O 0.9994 percentageport 1.0776 percentage points 0.000 percentage points 0.6778 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 6.24% 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 Fairty valued Undervalued Overvalued Suppose instead of replacing Atterie Inc.'s stock with Transfer Puels cos stock, Brandon considers replacing Atterie Inc.'s stock with the equal dollar allocation to shares of Company Xs stock that has a higher beta than Atterie Inc. If everything else remains constant, the portfolio's beta would 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 carings consensus of stock analysts, Brandon expects a return of 6.24% from the portfolio with the new weights. Does he think that the required return as compared to expected returns is undervalued, overvalued, or fairly valand? Fairty valued Undervalued Overvalued decrease increase head of replacing Atteric Inc.'s stock with Transter Fuels Co.'s stock, Brandon considers replacing Atteric Inc.'s stock with the equal dollar shares of Company X3 stock that has a higher beta thar. Atteric Inc. If everything else remains constant, the portfollos beta would Brandon is an analyst at a wealth management firm. One of his clients holds a $7,500 portfolio that consists of four stocks. The mestment allocation in the portfolio along with the contribution of risk trom each stock is given in the following table: Stock Attric Inc. (AT) Arthur Trust Inc. (AT) u Corp. (LC Transfer Fuels Co.) Investment Allocation Beta Standard Deviation 0.750 38.00% 204 1.600 42.00% 159 1.100 45.00 30 0.300 49.00% Brandon calculated the portfoto's beta 0.838 and the portfoto's required return 6.000 Brandon think it will be a good idea to relocate the funds in his cents portfolio. He recommends replacing Attarie Inc.'s shares with the same amount in additionat shares of Transfer Fuels Co. The risk-free rate 45 and the marketeisk premium is 5.50% According to Brandon recommendation, assuming that the market is in eculibrum, how much will the portfolio's required return change? (Note: Do not round your intermediate calculations.) O 0.9994 percentageport 1.0776 percentage points 0.000 percentage points 0.6778 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 6.24% 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 Fairty valued Undervalued Overvalued Suppose instead of replacing Atterie Inc.'s stock with Transfer Puels cos stock, Brandon considers replacing Atterie Inc.'s stock with the equal dollar allocation to shares of Company Xs stock that has a higher beta than Atterie Inc. If everything else remains constant, the portfolio's beta would 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 carings consensus of stock analysts, Brandon expects a return of 6.24% from the portfolio with the new weights. Does he think that the required return as compared to expected returns is undervalued, overvalued, or fairly valand? Fairty valued Undervalued Overvalued decrease increase head of replacing Atteric Inc.'s stock with Transter Fuels Co.'s stock, Brandon considers replacing Atteric Inc.'s stock with the equal dollar shares of Company X3 stock that has a higher beta thar. Atteric Inc. If everything else remains constant, the portfollos beta would

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial management theory and practice

Authors: Eugene F. Brigham and Michael C. Ehrhardt

13th edition

1439078106, 111197375X, 9781439078105, 9781111973759, 978-1439078099

More Books

Students also viewed these Finance questions

Question

=+How might you explain this phenomenon?

Answered: 1 week ago