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Landon Stevens is evaluating the expected performance of two commonstocks, Furhman Labs, Inc., and Garten Testing, Inc. The risk-freerate is 5.6 percent, the expected return on the market is 13.0percent, and the betas of the two stocks are 1.8 and .7,respectively. StevensAc€?cs own forecasts of the returns on the twostocks are 17.20 percent for Furhman Labs and 11.60 percent forGarten.

1.  
Calculate the required return for each stock. (Do not roundintermediate calculations. Enter your answers as a percent roundedto 2 decimal places. Omit the “%” sign in your response.)

Stock   Required Return
Furhman Labs   %
Garten Testing   %

2.   Is each stock undervalued, fairly valued, orovervalued?
      
    Furhman Labs
      
   
   Fair valued
   Undervalued
   Overvalued
      
    Garten Testing
      
   
   Overvalued
   Fair valued
   Undervalued