Landon Stevens is evaluating the expected performance of two common stocks, Furhman Labs, Inc., and Garten Testing, Inc. The risk-free rate is 4.7 percent, the expected return on the market is 11.2 percent, and the betas of the two stocks are 1.7 and .7, respectively. Stevenss own forecasts of the returns on the two stocks are 15.40 percent for Furhman Labs and 11.10 percent for Garten.

1.	Calculate the required return for each stock.(Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Stock	Required Return
Furhman Labs	%
Garten Testing	%

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

You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.27, and the total portfolio is exactly as risky as the market, what must the beta be for the other stock in your portfolio?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Beta

A stock has an expected return of 15.1 percent, a beta of 1.60, and the expected return on the market is 11.40 percent. What must the risk-free rate be?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Risk-free rate

%