a$.$ The expected returns and betas of four stocks are given in the following table:

Stock Expected Return $(\%)$ Beta

P $141\mathrm{.}2$

Q $160\mathrm{.}7$

R $221\mathrm{.}5$

S $151\mathrm{.}0$

Assume that, the risk$-$free is $5\%$ and market risk is $14\%.$ Determine which stock is overvalued, undervalued, or fairly valued.

b$.$ Describe the functions of investment companies.