Finance - Required Return

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Question

A manager believes his firm will earn a 16.00 percent return next year. His firm has a beta of 1.23, the expected return on the market is 14.00 percent, and the risk-free rate is 6.00 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 Jan 22 2014 05:40 AM

 

Solution ID:609207 | This paper was updated on 26-Nov-2015

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