Poornima is an analyst at a wealth management firm. One of her clients holds a $7,500 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: Beta Investment Allocation 35% 0.600 Stock Atteric Inc. Arthur Inc. Li Corp. Baque Co. Standard Deviation 0.23% 0.27% 20% 1.500 15% 1.300 0.30% 30% 0.500 0.34% Poornima calculated the portfolio's beta as 0.855 and the portfolio's expected return as 12.41%. Poornima thinks it will be a good idea to reallocate the funds in her client's portfolio. She recommends replacing Atteric Inc.'s shares with the same amount in additional shares of Baque Co. The risk-free rate is 6.00%, and the market risk premium is 7.50%. According to Poornima's recommendation, assuming that the market is in equilibrium, how much will the portfolio's required return change? 0.20% 0.26% 0.30% 0.32% 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, Poornima expects a return of 12.17% 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? Undervalued Overvalued Fairly valued Suppose instead of replacing Atteric Inc.'s stock with Baque Co.'s stock, Poornima 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 portfolio's beta would and the required return from the portfolio would Fairly valued increase tead of replacing Atteric Inc.'s stock with Baque Co.'s stock, Poornima considers replacing Atteric Inc.'s stock with the equal dollar decrease shares of Company X's stock that has a higher beta than Atteric Inc.. If everything else remains constant, the portfolio's beta would and the required return from the portfolio would decrease Suppose instead of replacing Atteric Inc.'s stock with Baque Co.'s s ma considers replacing Atteric Inc.'s stock with the equal dollar increase allocation to shares of Company X's stock that has a higher beta th hc.. If everything else remains constant, the portfolio's beta would and the required return from the portfolio would