A manager believes his firm will earn a return of 18.60 percent next year. His firm has a beta of 125, the expected return on the market is 15.60 percent, and the risk-free rate is 7.60 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. undervalued overvalued