Landon Stevens is evaluating the expected performance of two common stocks, Furhman Labs, Inc., and Garten Testing, Inc. The risk$-$free rate is $5\mathrm{.}3$ percent, the expected return on the market is $12\mathrm{.}4$ percent, and the betas of the two stocks are $1\mathrm{.}5$ and $0\mathrm{.}7,$ respectively. Stevens$$s own forecasts of the returns on the two stocks are $16\mathrm{.}60$ percent for Furhman Labs and $11\mathrm{.}30$ percent for Garten.

a$.$ Calculate the required return for each stock. $($Do not round intermediate calculations. Enter your answers as a percent rounded to $2$ decimal places.$)$

b$.$ Is each stock undervalued, fairly valued, or overvalued?

Furhman Labs

Garten Testing