Adequate information: Stock D Stock U Stock A Date Market return Company return Date Market return Company return Date Market return Company return 12-Jul -0.3 -0.5 8-Feb -0.9 -1.1 1-Oct 0.5 0.3 13-Jul 0 0.2 9-Feb -1 -1.1 2-Oct 0.4 0.6 16-Jul 0.5 0.7 10-Feb 0.4 0.2 3-Oct 1.1 1.1 17-Jul -0.5 -0.3 11-Feb 0.6 0.8 6-Oct 0.1 -0.3 18-Jul -2.2 1.1 12-Feb -0.3 -0.1 7-Oct -2.2 -0.3 19-Jul -0.9 -0.7 15-Feb 1.1 1.2 8-Oct 0.5 0.5 20-Jul -1 -1.1 16-Feb 0.5 0.5 9-Oct -0.3 -0.2 23-Jul 0.7 0.5 17-Feb -0.3 -0.2 10-Oct 0.3 1.1 24-Jul 0.2 0.1 18-Feb 0.3 0.2 13-Oct 0 -0.1 To compute: The cumulative abnormal return for these stocks as a group, prepare the graph and provide explanation. Introduction: The summation of abnormal returns for a required period of time is termed as cumulative abnormal return.

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Answer 1

Question

Chapter 14, Problem 1QAP

Summary Introduction

Adequate information:

Stock D Stock U Stock A
Date Market return Company return Date Market return Company return Date Market return Company return
12-Jul -0.3 -0.5 8-Feb -0.9 -1.1 1-Oct 0.5 0.3
13-Jul 0 0.2 9-Feb -1 -1.1 2-Oct 0.4 0.6
16-Jul 0.5 0.7 10-Feb 0.4 0.2 3-Oct 1.1 1.1
17-Jul -0.5 -0.3 11-Feb 0.6 0.8 6-Oct 0.1 -0.3
18-Jul -2.2 1.1 12-Feb -0.3 -0.1 7-Oct -2.2 -0.3
19-Jul -0.9 -0.7 15-Feb 1.1 1.2 8-Oct 0.5 0.5
20-Jul -1 -1.1 16-Feb 0.5 0.5 9-Oct -0.3 -0.2
23-Jul 0.7 0.5 17-Feb -0.3 -0.2 10-Oct 0.3 1.1
24-Jul 0.2 0.1 18-Feb 0.3 0.2 13-Oct 0 -0.1

To compute: The cumulative abnormal return for these stocks as a group, prepare the graph and provide explanation.

Introduction: The summation of abnormal returns for a required period of time is termed as cumulative abnormal return.

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Answer 2

Question

Chapter 14, Problem 1QAP

Summary Introduction

Adequate information:

Stock D Stock U Stock A
Date Market return Company return Date Market return Company return Date Market return Company return
12-Jul -0.3 -0.5 8-Feb -0.9 -1.1 1-Oct 0.5 0.3
13-Jul 0 0.2 9-Feb -1 -1.1 2-Oct 0.4 0.6
16-Jul 0.5 0.7 10-Feb 0.4 0.2 3-Oct 1.1 1.1
17-Jul -0.5 -0.3 11-Feb 0.6 0.8 6-Oct 0.1 -0.3
18-Jul -2.2 1.1 12-Feb -0.3 -0.1 7-Oct -2.2 -0.3
19-Jul -0.9 -0.7 15-Feb 1.1 1.2 8-Oct 0.5 0.5
20-Jul -1 -1.1 16-Feb 0.5 0.5 9-Oct -0.3 -0.2
23-Jul 0.7 0.5 17-Feb -0.3 -0.2 10-Oct 0.3 1.1
24-Jul 0.2 0.1 18-Feb 0.3 0.2 13-Oct 0 -0.1

To compute: The cumulative abnormal return for these stocks as a group, prepare the graph and provide explanation.

Introduction: The summation of abnormal returns for a required period of time is termed as cumulative abnormal return.

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Answer 3

Question

Chapter 14, Problem 1QAP

Summary Introduction

Adequate information:

Stock D Stock U Stock A
Date Market return Company return Date Market return Company return Date Market return Company return
12-Jul -0.3 -0.5 8-Feb -0.9 -1.1 1-Oct 0.5 0.3
13-Jul 0 0.2 9-Feb -1 -1.1 2-Oct 0.4 0.6
16-Jul 0.5 0.7 10-Feb 0.4 0.2 3-Oct 1.1 1.1
17-Jul -0.5 -0.3 11-Feb 0.6 0.8 6-Oct 0.1 -0.3
18-Jul -2.2 1.1 12-Feb -0.3 -0.1 7-Oct -2.2 -0.3
19-Jul -0.9 -0.7 15-Feb 1.1 1.2 8-Oct 0.5 0.5
20-Jul -1 -1.1 16-Feb 0.5 0.5 9-Oct -0.3 -0.2
23-Jul 0.7 0.5 17-Feb -0.3 -0.2 10-Oct 0.3 1.1
24-Jul 0.2 0.1 18-Feb 0.3 0.2 13-Oct 0 -0.1

To compute: The cumulative abnormal return for these stocks as a group, prepare the graph and provide explanation.

Introduction: The summation of abnormal returns for a required period of time is termed as cumulative abnormal return.

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Answer 4

Question

Chapter 14, Problem 1QAP

Summary Introduction

Adequate information:

Stock D Stock U Stock A
Date Market return Company return Date Market return Company return Date Market return Company return
12-Jul -0.3 -0.5 8-Feb -0.9 -1.1 1-Oct 0.5 0.3
13-Jul 0 0.2 9-Feb -1 -1.1 2-Oct 0.4 0.6
16-Jul 0.5 0.7 10-Feb 0.4 0.2 3-Oct 1.1 1.1
17-Jul -0.5 -0.3 11-Feb 0.6 0.8 6-Oct 0.1 -0.3
18-Jul -2.2 1.1 12-Feb -0.3 -0.1 7-Oct -2.2 -0.3
19-Jul -0.9 -0.7 15-Feb 1.1 1.2 8-Oct 0.5 0.5
20-Jul -1 -1.1 16-Feb 0.5 0.5 9-Oct -0.3 -0.2
23-Jul 0.7 0.5 17-Feb -0.3 -0.2 10-Oct 0.3 1.1
24-Jul 0.2 0.1 18-Feb 0.3 0.2 13-Oct 0 -0.1

To compute: The cumulative abnormal return for these stocks as a group, prepare the graph and provide explanation.

Introduction: The summation of abnormal returns for a required period of time is termed as cumulative abnormal return.

Expert Solution & Answer

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Answer 5

Chapter 14, Problem 1QAP

Summary Introduction

Adequate information:

Stock D Stock U Stock A
Date Market return Company return Date Market return Company return Date Market return Company return
12-Jul -0.3 -0.5 8-Feb -0.9 -1.1 1-Oct 0.5 0.3
13-Jul 0 0.2 9-Feb -1 -1.1 2-Oct 0.4 0.6
16-Jul 0.5 0.7 10-Feb 0.4 0.2 3-Oct 1.1 1.1
17-Jul -0.5 -0.3 11-Feb 0.6 0.8 6-Oct 0.1 -0.3
18-Jul -2.2 1.1 12-Feb -0.3 -0.1 7-Oct -2.2 -0.3
19-Jul -0.9 -0.7 15-Feb 1.1 1.2 8-Oct 0.5 0.5
20-Jul -1 -1.1 16-Feb 0.5 0.5 9-Oct -0.3 -0.2
23-Jul 0.7 0.5 17-Feb -0.3 -0.2 10-Oct 0.3 1.1
24-Jul 0.2 0.1 18-Feb 0.3 0.2 13-Oct 0 -0.1

To compute: The cumulative abnormal return for these stocks as a group, prepare the graph and provide explanation.

Introduction: The summation of abnormal returns for a required period of time is termed as cumulative abnormal return.

Answer 6

Chapter 14, Problem 1QAP

Summary Introduction

Adequate information:

Stock D Stock U Stock A
Date Market return Company return Date Market return Company return Date Market return Company return
12-Jul -0.3 -0.5 8-Feb -0.9 -1.1 1-Oct 0.5 0.3
13-Jul 0 0.2 9-Feb -1 -1.1 2-Oct 0.4 0.6
16-Jul 0.5 0.7 10-Feb 0.4 0.2 3-Oct 1.1 1.1
17-Jul -0.5 -0.3 11-Feb 0.6 0.8 6-Oct 0.1 -0.3
18-Jul -2.2 1.1 12-Feb -0.3 -0.1 7-Oct -2.2 -0.3
19-Jul -0.9 -0.7 15-Feb 1.1 1.2 8-Oct 0.5 0.5
20-Jul -1 -1.1 16-Feb 0.5 0.5 9-Oct -0.3 -0.2
23-Jul 0.7 0.5 17-Feb -0.3 -0.2 10-Oct 0.3 1.1
24-Jul 0.2 0.1 18-Feb 0.3 0.2 13-Oct 0 -0.1

To compute: The cumulative abnormal return for these stocks as a group, prepare the graph and provide explanation.

Introduction: The summation of abnormal returns for a required period of time is termed as cumulative abnormal return.

Answer 7

Chapter 14, Problem 1QAP

Summary Introduction

Adequate information:

Stock D Stock U Stock A
Date Market return Company return Date Market return Company return Date Market return Company return
12-Jul -0.3 -0.5 8-Feb -0.9 -1.1 1-Oct 0.5 0.3
13-Jul 0 0.2 9-Feb -1 -1.1 2-Oct 0.4 0.6
16-Jul 0.5 0.7 10-Feb 0.4 0.2 3-Oct 1.1 1.1
17-Jul -0.5 -0.3 11-Feb 0.6 0.8 6-Oct 0.1 -0.3
18-Jul -2.2 1.1 12-Feb -0.3 -0.1 7-Oct -2.2 -0.3
19-Jul -0.9 -0.7 15-Feb 1.1 1.2 8-Oct 0.5 0.5
20-Jul -1 -1.1 16-Feb 0.5 0.5 9-Oct -0.3 -0.2
23-Jul 0.7 0.5 17-Feb -0.3 -0.2 10-Oct 0.3 1.1
24-Jul 0.2 0.1 18-Feb 0.3 0.2 13-Oct 0 -0.1

To compute: The cumulative abnormal return for these stocks as a group, prepare the graph and provide explanation.

Introduction: The summation of abnormal returns for a required period of time is termed as cumulative abnormal return.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 14 - Prob. 1CQ Ch. 14 - Prob. 2CQ Ch. 14 - Efficient Market Hypothesis Which of the following...Ch. 14 - Market Efficiency Implications Explain why a...Ch. 14 - Efficient Market Hypothesis A stock market analyst...Ch. 14 - Semistrong Efficiency If a market is semistrong...Ch. 14 - Efficient Market Hypothesis What are the...Ch. 14 - Prob. 8CQ Ch. 14 - Prob. 9CQ Ch. 14 - Efficient Market Hypothesis For each of the...

Solution Summary: The author explains how to compute the cumulative abnormal return for a required period of time by subtracting the market return from the stock's return.

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Chapter 14 Solutions

Stock D			Stock U			Stock A
Date	Market return	Company return	Date	Market return	Company return	Date	Market return	Company return
12-Jul	-0.3	-0.5	8-Feb	-0.9	-1.1	1-Oct	0.5	0.3
13-Jul	0	0.2	9-Feb	-1	-1.1	2-Oct	0.4	0.6
16-Jul	0.5	0.7	10-Feb	0.4	0.2	3-Oct	1.1	1.1
17-Jul	-0.5	-0.3	11-Feb	0.6	0.8	6-Oct	0.1	-0.3
18-Jul	-2.2	1.1	12-Feb	-0.3	-0.1	7-Oct	-2.2	-0.3
19-Jul	-0.9	-0.7	15-Feb	1.1	1.2	8-Oct	0.5	0.5
20-Jul	-1	-1.1	16-Feb	0.5	0.5	9-Oct	-0.3	-0.2
23-Jul	0.7	0.5	17-Feb	-0.3	-0.2	10-Oct	0.3	1.1
24-Jul	0.2	0.1	18-Feb	0.3	0.2	13-Oct	0	-0.1