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 $r_A=3\mathrm{.}1\%.$ The rate of return on Bpex was only $r_B=2\mathrm{.}5\%.$ The market today responded to very encouraging news about the unemployment rate, and $r_M=3\%.$ The historical relationship between returns on these stocks and the market portfolio has been estimated from index model regressions as:

Apex: $r_A=0\mathrm{.}2\%+1\mathrm{.}4r_M$

Bpex: $r_B=-0\mathrm{.}1\%+0\mathrm{.}6r_M$

Required:

a$.$ What is the predicted returns for Apex & Bpex?

b$.$ Which company do you think won the lawsuit?