Under$/$Over Valued Stock A manager believes his firm will earn a $16\mathrm{.}7$ percent return next year. His firm has a beta of $1\mathrm{.}57,$ the expected return on the market is $14\mathrm{.}7$ percent, and the risk$-$free rate is $4\mathrm{.}7$ percent. Compute the return the firm should earn given its level of risk and determine whether the manager is saying the firm is under$-$valued or over$-$valued.

Multiple Choice

$24\mathrm{.}079\%,$ under$-$valued

$24\mathrm{.}079\%,$ over$-$valued

$20\mathrm{.}4\%,$ under$-$valued

$20\mathrm{.}4\%,$ over$-$valued