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Business, 29.02.2020 04:18 keaganaplin

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 = 3.3%. The rate of return on Bpex was only rB = 2.7%. 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 = 0.6% + 1.2rM Bpex: rB = −0.1% + 0.5rMa. What is the predicted returns for Apex & Bpex?b. Which company do you think won the lawsuit?

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