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

In a recent closely contested lawsuit, Apex sued Bpex for patent infringement. The jury cane back today with its decision. The rate of return on Apex was rA = 3.4%. The rate of return on Bpex was only rB = 2.8%. The market today responded to very encouraging news about the unemployment rate, and rM = 3%. The historical relationship between returns on these stocks and the market portfolio has been estimated from index model regressions as:

Apex: rA = .4% + 1.2rm

Bpex: rB = -.1% + .4rm

What is the predicted returns for Apex and Bpex?

Which company do you think won the lawsuit?

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 3.41 The rate of return on Bpex was only 2.8. The market today responded to very encouraging news about the unemployment rate, and 3%. The historical relationship between returns on these stocks and the market portfolio has been estimated from index model regressions as Apex A 0.4 1.2 Bpex -0.15 0.4 a. What is the predicted retums for Apex & Bpex? (Do not round Intermediate calculations, Round your answers to 1 decimal place) Predicted Returns Apex pex b. Which company do you think won the lawsuit Apex Bpex

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