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 infringement. The jury came back today with its decision. The rate of return on Apex was r_A = 3.2%. The rate of return on Bpex was only r_B = 2.6%. The market today responded to very encouraging news about the unemployment rate, and r_M = 3.85%. The historical relationship between returns on these stocks and the market portfolio has been estimated from index model regressions as:

Apex: r_A = 0.2% + 1.5r_M

Bpex: r_B = 0.1% + 0.7r_M

What is the predicted returns for Apex? (Do not round intermediate calculations. Round your answers to the 2nd decimal place. Omit the "%" sign in your response.)

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