. Portfolio beta and weights Brandon 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 glven in the following table: Brandon caiculated the portfolio's beta as 0,888 and the portfolios required return as 12.6600%. Brandon thinks it will be a good idea to reallocate the funds in his client's portfolio. He recommends replacing Atteric inci's shares with the same. amount in additional shares of Transfer Fueis Co. The risk-free rate is 6%, and the market risk premium is 7.50%. According to Brandon's recommendation, assuming that the market is in equilibrium, how much will the portfolio's required retum change? (Note: Do not round your intermediate calculations.) 0.6600 percentage points 0.8184 percentage points 0.7590 percentage points 0.5146 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. Brandon thinks it will be a good idea to reallocate the funds in his client's portfolio. He recommends replacing Atteric incis shares with the same. amount in additional shares of Transter Fuels Co. The risk.free rate is 6%, and the market risk premlum is 7.50%. 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.) 0.6600 percentage points 0.8184 percentage points 0.7590 percentage points 0.5148 percentage points Analysts' estimates on expected retums 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 13.50% 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? Undervalued fairiy valued Overvalued Suppase instes 9 Acteric Incis stock with Transfer Fueis Co's stock, Branden considers replacing Atteric Incis stock with the equal doliar aliocation to sh pany x 's stock that has a higher beta than Atteric inc. If everything else remains constant, the required return from the
