A manager believes his firm will earn a 12.45 percent return next year. His firm has a beta of 1.30, the expected return on the market is 11.00 percent, and the risk-free rate is 2.00 percent. Compute the return the firm should earn given its level of risk. (Round your answer to 2 decimal places.) Required returrn Determine whether the manager is saying the firm is undervalued or overvalued. Undervalued Overvalued