A manager believes his firm will earn a 10.87 percent return next year. His firm has a beta of 1.01, the expected return on the market is 11.30 percent, and the risk-free rate is 5.30 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.

	Overvalued
	Undervalued