Problem $3(10$ points$)$ As an equity analyst, you have developed the following return forecasts and risk estimates for two different stock mutual funds $($Fund $T$ and Fund U$)$:

$\backslash$table$[[,$Forecasted Return,CAPM Beta$],[$Fund T$,9\mathrm{.}00\%,1\mathrm{.}20],[$Fund U$,10\mathrm{.}00\%,0\mathrm{.}80]]$

$3.$a$.(6$ points$)$ If the risk$-$free rate $($RFR$)$ is $3\mathrm{.}9\%$ and the expected market risk premium $($i$.$e$.,E(R_M)-$ RFR$)$ is $6\mathrm{.}1\%,$ calculate the expected return for each mutual fund according to the CAPM.

$3.$b$.(4$ points$)$ Decide which fund is overvalued, undervalued or properly valued and explain why?