drop down 1 options: 0.42%, 0.48%, 0.52%, 0.33%

drop down 2 options: decrease or increase

drop down 3 options: decrease or increase

Edison is an analyst at a wealth management firm. One of his clients 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 0.23% 35% 0.600 1.500 20% 0.27% Atteric Inc. (AI) Arthur Trust Inc. (AT) Lobster Supply Corp. (LSC) Baque Co. (BC) 15% 1.100 0.30% 30% 0.400 0.34% Edison calculated the portfolio's beta as 0.795 and the portfolio's expected return as 10.17%. Edison 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 Baque Co. The risk-free rate is 5.00%, and the market risk premium is 6.50%. According to Edison's recommendation, assuming that the market is in equilibrium, the portfolio's required return will change by. 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, Edison expects a return of 9.74% 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? Fairly valued Undervalued O Overvalued Suppose instead of replacing Atteric Inc.'s stock with Baque Co.'s stock, Edison 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