1. A manager believes his firm will earn a return of 17.00 percent next year. His firm has a beta of 1.24 , the expected return on the market is 15.00 percent, and the risk-free rate is 7.00 percent. 
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3. a. Compute the return the firm should earn given its level of risk. (Round your answer to 2 decimal places.) 
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5. b. Determine whether the manager is saying the firm is undervalued or overvalued.