Problem $10-19$ Under$-/$Overvalued Stock $($LG$10-3)$ A manager

believes his firm will earn a $19\mathrm{.}80$ percent return next year. His

firm has a beta of $1\mathrm{.}53,$ the expected return on the market is $12\mathrm{.}60$

percent, and the risk$-$free rate Is $5\mathrm{.}60$ 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. Overvalued Undervalued