Q Seat Chapter 8 Assignment 12. Portfolio beta and weights Rudy Tools Brian is an analyst at a wealth management firm. One of his dients 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: Stock as Investment Allocation 35% 20% 15% 30% Atteric Inc. Arthur Inc. Lobster Supply Corp. Transfer Fuels Co. oss Tips Beta 0.600 1.600 1.100 0.400 Standard Deviation 0.23% 0.27 0.30% 0.34% ss Tips ge Unlimited in 2 Days se Options Brian calculated the portfolio's beta as 0.815 and the portfolio's expected return as 8.48%. Brian 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 Transfer Fuels Co. The risk-free rate is 4.00%, and the market risk premium is 5.50% more According to Brian's recommendation, assuming that the market is in equilibrium, how much will the portfolio's required return change O 0.43% ack O 0.27% O 0.40% O 0.35% 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, Betan expects a return of 8.12% from the portfolio with the new weights. Does the third Chapter 8 Assignment Brian 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 Transfer Fuels Co. The risk-free rate is 4.00%, and the market risk premium is 5.50%. dy Tools According to Brian's recommendation, assuming that the market is in equilibrium, how much will the portfolio's required return change? O 0.43% O 0.27% Tips O 0.40% Tips O 0.35% Unlimited 2 Days 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. Options Suppose, based on the earnings consensus of stock analysts, Brian expects a return of 8.12% 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? are Undervalued O Fairly valued k Overvalued Suppose instead of replacing Atteric Inc.'s stock with Transfer Fuels Co.'s stock, Brian 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 Grade It Now Save & Continue Continue without saving