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We want to assign a higher weight to specific stocks but still need a diversified portfolio 21. (Bonus 1) We want to assign a higher

We want to assign a higher weight to specific stocks but still need a diversified portfolio

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21. (Bonus 1) We want to assign a higher weight to specific stocks but still need a diversified portfolio. To do that, we choose to adjust stock return forecasts from analyst toward to mean. You find the first forecasted return to be R1= 16% and market return Rm=12%. According to the technique that adjusts forecast toward mean in two steps, what should be the adjusted return for the following forecasted return: R2-20%? a) 20% b) 18% c) 16% d) 14% e) 12%

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