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Rafael 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

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Rafael 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 Investment Allocation Beta Standard Deviation 38.00% 35% 0.600 20% 42.00% Atteric Inc. (AT) Arthur Trust Inc. (AT) u Corp. (LC) Baque Co. (BC) 15% 1.600 1.300 0.400 45.00% 49.00% 30% Rafael calculated the portfolio's beta as 0.845 and the portfolio's required return as 8.6475%. Rafael thinks it will be a good idea to reallocate the funds in his client's portfolio. He recommends repacing Atteric Inc.'s shares with the same amount in additional shares of Baque Co. The risk-free rate is 4%, and the market risk premium is 5.50%. According to Rafael's recommendation, assuming that the market is in equnbrium, how much will the portfolio's required return change? (Note: Do not round your intermediate calculations.) O 0.3850 percentage points O 0.4774 percentage points O 0.3003 percentage points O 0.4428 percentage points Analysts' estimates on expected returns from equity investments are based on several factors. These estimations also often include subjective and judymental factors, because different analysts interpret data in different ways Suppose, based on the earnings consensus of stock analysts, Rafae expects a return of 6.769 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 O Fairly valued Overvalued Suppose interlot replacing Atterie in stock with Bague Cos stock, Babel considers replacing Atteric Inc.'s stock with the equat dollar allocation to shares of Company X's stock that has a higher beta than Atteric Inc. If everything else remains constant, the required return from the portfolio would

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