n 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 $=3\mathrm{.}1\%.$ The rate of return on Bpex was only rB $=2\mathrm{.}5\%.$ 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 $=0\mathrm{.}2\%+1\mathrm{.}4$rM

Bpex: rB $=0\mathrm{.}1\%+0\mathrm{.}6$rM

Required:

What is the predicted returns for Apex & Bpex?

Which company do you think won the lawsuit?