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In a recent closely contested lawsuit, Apex sued Bpex for patent infringement over the last month. In the last month, the market excess return was
In a recent closely contested lawsuit, Apex sued Bpex for patent infringement over the last month. In the last month, the market excess return was RM = 0.3% while the excess returns on Apex and Bpex were RA = 0.5% and RB = 0.6% respectively. The historical relationship between returns (%) on these stocks and the market index has been estimated from SIM as: Apex: r A = 0.1% +0.6FM 0.3% +1.4rM BpexTB Suppose further that the risk-free rate in the last month was rf = 0.7%. Which company do you think will win the lawsuit? State your answer with reasons. In a recent closely contested lawsuit, Apex sued Bpex for patent infringement over the last month. In the last month, the market excess return was RM = 0.3% while the excess returns on Apex and Bpex were RA = 0.5% and RB = 0.6% respectively. The historical relationship between returns (%) on these stocks and the market index has been estimated from SIM as: Apex: r A = 0.1% +0.6FM 0.3% +1.4rM BpexTB Suppose further that the risk-free rate in the last month was rf = 0.7%. Which company do you think will win the lawsuit? State your answer with reasons
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