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A manager believes his firm will earn a 1630 percent return next year His firm has a beta of 184 the expected return on the market is 1400 percent and the risk free rate is 300 percent

A manager believes his firm will earn a 16.30 percent return next year. His firm has a beta of 1.84, the expected return on the market is 14.00 percent, and the risk-free rate is 3.00 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.

A manager believes his firm will earn a 16.30 percent return next year. His firm has a beta of 1.84, the expected return on the market is 14.00 percent, and the risk-free rate is 3.00 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.

 

Apr 23 2020 View more View Less

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