Compute the return the firm should earn

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Under/Over Valued Stock A manager believes his firm will earn a 17.5 percent return next year. His firm has a beta of 1.65, the expected return on the market is 15.5 percent, and the risk-free rate is 5.5 percent. Compute the return the firm should earn given its level of risk and determine whether the manager is saying the firm is under-valued or over-valued. 26.575%, over-valued 22.0%, under-valued 26.575%, under-valued 22.0%, over-valued

Reference no: EM132154518

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