A financial analyst made the following predictions for next year: Expected market rate of return 14% Rate of return on treasury bills 8% Standard deviation of the market rate of return 8% Firm A's share price in one year $70 Correlation coefficient between the returns of A and the market 0.70 Standard deviation of firm A's rate of return 10%

What is the required rate of return on firm A? Firm A's common stock is currently trading at $62.50. Is it overvalued or undervalued?