Ross Company, Westerfield, Incorporated; and Jordan Company announced a new agreement to market their respective products in China on July 18, February 12, and October 7, respectively. Given the information below, calculate the cumulative abnormal return (CAR) for these stocks as a group. Assume all companies have 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. Westerfield, Incorporated Date July 12 July 13 July 16 July 17 July 18 July 19 July 20 July 23 July 24 Days from announcement 7 -3 -2 -1 0 1 2 3 4 Ross Company Market Return -0.2 0.1 0.6 -0.4 1.9 -0.8 -0.9 0.6 0.1 Ross Company Return -0.4 0.3 0.8 -0.2 1.3 -0.6 -1.0 0.4 Date February 8 February 9 Tebruary 10 rebruary 11 W field February 12 February 15 Tebruary 16 February 17 February 18 Abnormal Returns (R.-Ru Jordan Market Return -0.7 -0.8 0.6 0.8 1.3 0.7 -0.1 Sum Company Returo -9.9 -9.9 Date October 1 October 2 0.4 October 3 1.0 0.1 1.4 0.7 0.0 0.4 Average abnormal return October 6 October 7 October October 9 October 10 October 13 Cumulative average residual Jordan Company Market Return 0.3 0.2 0.9 -0.1 -2.4 0.3 -0.5 0.1 Company Return 0.5 0.8 1.3 -0.5 -0.5 0.3 -0.4 -0.1
Ross Company, Westerfield, Incorporated; and Jordan Company announced a new agreement to market their respective products in China on July 18, February 12, and October 7, respectively. Given the information below, calculate the cumulative abnormal return (CAR) for these stocks as a group. Assume all companies have 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. Westerfield, Incorporated Date July 12 July 13 July 16 July 17 July 18 July 19 July 20 July 23 July 24 Days from announcement 7 -3 -2 -1 0 1 2 3 4 Ross Company Market Return -0.2 0.1 0.6 -0.4 1.9 -0.8 -0.9 0.6 0.1 Ross Company Return -0.4 0.3 0.8 -0.2 1.3 -0.6 -1.0 0.4 Date February 8 February 9 Tebruary 10 rebruary 11 W field February 12 February 15 Tebruary 16 February 17 February 18 Abnormal Returns (R.-Ru Jordan Market Return -0.7 -0.8 0.6 0.8 1.3 0.7 -0.1 Sum Company Returo -9.9 -9.9 Date October 1 October 2 0.4 October 3 1.0 0.1 1.4 0.7 0.0 0.4 Average abnormal return October 6 October 7 October October 9 October 10 October 13 Cumulative average residual Jordan Company Market Return 0.3 0.2 0.9 -0.1 -2.4 0.3 -0.5 0.1 Company Return 0.5 0.8 1.3 -0.5 -0.5 0.3 -0.4 -0.1
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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Transcribed Image Text:Ross Company, Westerfield, Incorporated; and Jordan Company announced a new agreement to market their respective products in
China on July 18, February 12, and October 7, respectively. Given the information below, calculate the cumulative abnormal return
(CAR) for these stocks as a group. Assume all companies have 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.
Westerfield, Incorporated
Date
July 12
July 13
July 16
July 17
July 18
July 19
July 20
July 23
July 24
Days from
announcement
-4
-3
-2
-1
0
1
2
3
4
Ross Company
Market
Return
-0.2
0.1
0.6
-0.4
1.9
-0.8
-0.9
0.6
Ross
Company
Return
-0.4
0.3
0.8
-0.2
1.3
-0.6
-1.0
Date
February 8
February 9
February 10
rebruary 11
February 12
February 15
February 161
0.4
February 17
0.0 February 18
Abnormal Returns (R-RM)
Jordan
W'field
Market
Return
-0.7
-0.8
0.6
0.8
-0.1
1.3
0.7
-0.1
0.5
Sum
Company
Return
Date
October 1
October 2
October 3
-0.9
-0.9
0.4
1.0
0.1
1.4
0.7
0.0 October 10
0.4
October 13
Average
abnormal
return
October 6
October 7
October 8
October 9
Cumulative
average
residual
Jordan Company
Market
Return
0.3
0.2
0.9
-0.1
-2.4
0.3
-0.5
0.1
-0.2
Company
Return
0.5
0.8
1.3
-0.5
-0.5
0.3
-0.4
-0.1
-0.6
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