Question
A manager believes his firm will earn a 19.80 percent return next year. His firm has a beta of 1.53, the expected return on the
| A manager believes his firm will earn a 19.80 percent return next year. His firm has a beta of 1.53, the expected return on the market is 12.60 percent, and the risk-free rate is 5.60 percent. |
| Compute the return the firm should earn given its level of risk. |
| Required return | % |
| Determine whether the manager is saying the firm is undervalued or overvalued. | ||||
|
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Finance At 40 Financial Intelligence
Authors: MOIRA O'NEILL Moira O'Neill
1st Edition
1408101114, 978-1408101117
