Question: In a recent closely contested lawsuit, Apex sued Bpex for patent infringement. The jury came back today with its decision. The rate of return on

In a recent closely contested lawsuit, Apex sued Bpex for patent

In a recent closely contested lawsuit, Apex sued Bpex for patent infringement. The jury came back today with its decision. The rate of return on Apex was ra = 3.9%. The rate of return on Bpex was only rb = 3.3%. The market today responded to very encouraging news about the unemployment rate, and rm = 3.6%. The historical relationship between returns on these stocks and the market portfolio has been estimated from index model regressions as: Apex ra = 0.5% + 1.2rM Bpex: r = -0.1% + 0.6FM a. What is the predicted returns for Apex & Bpex? (Do not round intermediate calculations. Round your answers to 1 decimal place.) Predicted Returns % | Apex Bpex % b. Which company do you think won the lawsuit? O Apex

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