Manager is saying the firm is undervalued or overvalued

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Reference no: EM131928670

Under-/Overvalued Stock. A manager believes his firm will earn a 21.80 percent return next year. His firm has a beta of 1.73, the expected return on the market is 19.00 percent, and the risk-free rate is 8.00 percent. Compute the return the firm should earn given its level of risk. Required return 23.57 % Determine whether the manager is saying the firm is undervalued or overvalued. Overvalued Undervalued.

Reference no: EM131928670

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