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pls help asap 9. Portfolio beta and weights Gregory is an analyst at a wealth management firm. One of his clients holds a $10,000 portfolio
pls help asap
9. Portfolio beta and weights Gregory is an analyst at a wealth management firm. One of his clients holds a $10,000 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: Gregory calculated the portfolio's beta as 0.888 and the portfolio's required return as 12.6600%. 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? (Note: Do not round your intermediate calculations.) 0.5148 percentage points 0.8184 percentage points 0.7590 percentage points 0.6600 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 10.50% from the portfolio with the new weights. Does he think that the required retum as compared to expected returns is undervalued, overvalued, or fairly valued? Undervalued Overvalued Fairly valued Suppose instead of replacing Atteric Incis 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 hos a higher beta than Atteric Inc. If everything else remains constant, the required return from the portfolio would Step by Step Solution
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