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