Compute return the firm should earn given its level of risk

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Reference no: EM131541059

A manager believes his firm will earn a 13.00 percent return next year. His firm has a beta of 1.52, the expected return on the market is 10.00 percent, and the risk-free rate is 5.00 percent.

Compute the return the firm should earn given its level of risk. (Round your answer to 2 decimal places.)

Required return %

Determine whether the manager is saying the firm is undervalued or overvalued.

Undervalued

Overvalued

Reference no: EM131541059

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