Saying the firm is under-valued or over-valued

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Reference no: EM131523347

Lyndee believes her firm will earn a 10 percent return next year. Her firm has a beta of 1. 5, the expected return on the market is 15 percent, and the risk-free rate is 5 percent. Compute the return the firm should earn given its level of risk and determine whether Lyndee is saying the firm is under-valued or over-valued.

Reference no: EM131523347

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