Before the start of trading on the morning of November 17, Sears and Kmart announced that Kmart would be takingover Sears. • Sears' stock price was $45.20/share at the end of the day on November 16, and $52.99/share at the end ofthe day on November 17.. The beta of Sears stock is 0.614. The return on the market portfolio of risky assets was 0.78percent on November 17. Sears paid no dividends on November 16 or November 17. Assume the riskless rate is zeroand that the alpha of Sears stock is zero.. Assume no other news came out about Sears or Kmart on November 16 andNovember 17. Question: Of the change in Sears' stock price from $45.20/share to $52.99/share, what dollar amountwas due to the announcement?

Sears' stock price on November 16 = $45.20Sears' stock price on November 17 = $52.99Beta of Sears'…

Answered: Before the start of trading on the…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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