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 = 3.7%. The rate of return on Bpex was only r_B = 3.3%. The market today responded to very encouraging news about the unemployment rate, and r_M = 3.4%. The historical relationship between returns on these stocks and the market portfolio has been estimated from index model regressions as: Apex: r_A = 0.3% + 1.5r_M Bpex: r_B = 0.1% + 0.5r_M

b. Which company do you think won the lawsuit? Apex Bpex