On November 14, Thorogood Enterprises announced that the public and acrimonious battle with its current CEO had been resolved.Under the terms of the deal, the CEO would step down from his position immediately. In exchange, he was given a generousseverance package. Given the information below, calculate the cumulative abnormal return (CAR) around this announcement. Assumethe company has an expected return equal to the market return.Note: A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "O" wherever required. Donot round intermediate calculations. Round your answers to 1 decimal place.MarketReturn (%) Return (%)CompanyDateNovember 70.80.4November 80.60.4November 9-0.5-0.3November 10-0.6-0.5November 111.61.0November 14-0.42.1November 150.10.1November 160.91.0November 170.50.6November 18-0.50.0November 210.60.2Days fromAnnouncement-5-4-3-2-1012345Daily AbnormalReturnCumulative AbnormalReturnPrev1 of 2Next >

Abnormal returnThe difference between the asset's actual return and the expected return is called…

Answered: On November 14, Thorogood Enterprises…

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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On November 14, Thorogood Enterprises announced that the public and acrimonious battle with its current CEO had been resolved. Under the terms of the deal, the CEO would step down from his position immediately. In exchange, he was given a generous severance package. Given the information below, calculate the cumulative abnormal return (CAR) around this announcement. Assume the company has an expected return equal to the market return. Note: A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 1 decimal place. Market Return (%) Company Return (%) Date November 7 1.3 0.9 November 8 1.1 0.9 November 9 -1.0 -0.4 November 10 -0.6 -0.6 November 11 2.1 1.0 November 14 -0.9 2.6 November 15 0.1 0.1 November 16 0.9 1.5 November 17 1.0 0.4 November 18 -1.0 0.0 November 21 1.1 0.2 Days from Announcement Daily Abnormal Cumulative Abnormal Return Return -5 -0.4 -0.4 -4…
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Suppose an accountant discovers that the company holds substantial amounts of inventory that are now obsolete and worthless. Should the accountant report the truth, write off the inventory as an asset, and take a loss on obsolete inventory in earnings? Suppose the accountant also knows that the company is already in distress. Should the accountant seek ways to avoid or delay recognizing inventory losses that will cause the company to report lower earnings and thereby experience a drop in stock price and potential bankruptcy? What if the accountant knows the company is growing quickly and generating healthy profits?

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