Question
A manager believes his firm will earn a 13.80 percent return next year. His firm has a beta of 1.39, the expected return on the
| A manager believes his firm will earn a 13.80 percent return next year. His firm has a beta of 1.39, the expected return on the market is 11.60 percent, and the risk-free rate is 3.60 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. | ||
|
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Finance Applications and Theory
Authors: Marcia Cornett, Troy Adair
3rd edition
1259252221, 007786168X, 9781259252228, 978-0077861681
