(Answered) Underover valued stocka manager believes his firm will earn

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Under/Over Valued Stock

A manager believes his firm will earn a 16.3 percent return next year. His firm has a beta of 1.53, the expected return on the market is 14.3 percent, and the risk-free rate is 4.3 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.

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