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Rafael is an analyst at a wealth management firm, One of his ditnts holds a 55,000 portfolio that coniests of four atocks. The imveatment altecaien

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Rafael is an analyst at a wealth management firm, One of his ditnts holds a 55,000 portfolio that coniests of four atocks. The imveatment altecaien in the portfolio along with the contribubon of risk from each sock is given in the folowing table: Rafael calculated the portfollo's beta as 0.888 and the portfolio's expected return as 12.664. Rafoel thinks it will be a good idea to reallocate the funds in his clent's boctholio. He recemmends replading Atteric lnci's shares with the same amourt. in additional shares of Baque Co. The risk-free rate is 6%, and the market ritk premium it 7.50%. Acconding to Rafael's recommendabion, assuming that the market is in tquilarium, how much will the pontsio's required retum change? 0.76 percentage peints 0.82 percentage points 0,66 percentage points Q.51 percentage points Suppose instead of replacing Ateric Inci's stock with Eaque Co.s stock, Rafael considers replacing Atteric fncis stock with the equal sellar alocatien to. shares of Company X's stock that has a higher beta than Atteric Ins. If everything eise remains cenatant, the portfolio's beta would and the required retum from the oortfolio would increase

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