A manager believes his firm will earn a 9.85 percent return next year. His firm has a beta of 1.19, the expected return on the market is 7.30 percent, and the risk-free rate is 2.30 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.

	O Undervalued
	O Overvalued