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 $r_A=3\mathrm{.}4\%.$ The rate of return on Bpex was only $r_B=2\mathrm{.}8\%.$ 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: $r_A=0\mathrm{.}4\%+1\mathrm{.}2r_M$

Bpex $r_B=-0\mathrm{.}1\%+0\mathrm{.}4r_M$

Required:

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

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

Complete this question by entering your answers in the tabs below.

Required $A$

Required B

What is the predicted returns for Apex & Bpex?

Note: Do not round intermediate calculations. Round your answers to $1$ decimal place.

$\backslash$table$[[,$Predicted Returns$],[$Apex$,\%$