Either increase or decrease.

Please complete the full problem since it's all part of one story problem.

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12. Portfolio beta and weights Nick 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 Atteric Inc. 35% 0.750 0.38% Arthur Inc. 20% 1.400 0.42% Li Corp. 15% 1.100 0.45% Transfer Fuels Co. 30% 0.500 0.49% Nick calculated the portfolio's beta as 0.858 and the portfolio's expected return as 8.72%. Nick 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%. According to Nick's recommendation, assuming that the market is in equilibrium, how much will the portfolio's required return change? O 0.60% O 0.48% O 0.37% O 0.55% Nick 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%. According to Nick's recommendation, assuming that the market is in equilibrium, how much will the portfolio's required return change? 0.60% 0.48% 0.37% 0.55% 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, Nick expects a return of 8.26% 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? O Fairly valued O Overvalued O Undervalued Suppose instead of replacing Atteric Inc.'s stock with Transfer Fuels Co.'s stock, Nick 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