Landon Stevens is evaluating the expected performance of two

common stocks, Furhman Labs, Incorporated, and Garten Testing,

Incorporated. The risk$-$free rate is $4\mathrm{.}0$ percent, the expected return on

the market is $12\mathrm{.}4$ percent, and the betas of the two stocks are $1\mathrm{.}2$ and

$0\mathrm{.}9,$ respectively. Landon's own forecasts of the returns on the two

stocks are $14\mathrm{.}70$ percent for Furhman Labs and $11\mathrm{.}40$ percent for Garten.

a$.$ Calculate the required return for each stock.

Note: 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

Undervalued

Overvalued

Fair valued

Garten Testing

Undervalued

Overvalued

Fair valued