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Wilson is now evaluating the expected performance of two common stocks, Furhman Labs Inc. and...

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Finance

Wilson is now evaluating the expected performance of two common stocks, Furhman Labs Inc. and Garten Testing Inc. He has gathered the following information: The risk-free rate is 3.0%. The expected return on the market portfolio is 9.0%. The beta of Furhman stock is 1.5. The beta of Garten stock is .8. Based on his own analysis, Wilson's forecasts of the returns on the two stocks are 11.0% for Furhman stock and 10.25% for Garten stock. Calculate the required rate of return for Furhman Labs stock and for Garten Testing stock. Indicate whether each stock is undervalued, fairly valued, or overvalued.

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