John Wilson, a portfolio manager, is evaluating the expected performance of two common stocks, Furhman Labs, Inc , and Garten Testing, Inc The risk free rate is 5 percent, the expected return on the market is 11 5 percent, and the betas of the two stocks are 1 5 and 8, respectively Wilson 's own forecasts of the returns on the two stocks are 13 25 percent for Furhman Labs and 11 25 percent for Garten Calculate the required return for each stock Is each stock undervalued, fairly valued, or overvalued

Question: John Wilson, a portfolio manager, is evaluating the expected performance of two common stocks, Furhman Labs, Inc., and Garten Testing, Inc. The risk-free rate is

John Wilson, a manager, is evaluating the expected performance of two common Furhman Labs, Inc., and Garten Testing, Inc. The risk-free rate is 5 percent, the on the market is 11.5 percent, and the betas of the two are 1.5 and .8, respectively. Wilson's own forecasts of the returns on the two are 13.25 percent for Furhman Labs and 11.25 percent for Garten. Calculate the required return for each stock. Is each stock undervalued, fairly valued, or overvalued?

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