On November 14, Thorogood Enterprises announced that the public and acrimonious
ID: 2649545 • Letter: O
Question
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. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 1 decimal places.)
Date Market Return (%) Company Return (%) 11/7 1.1 0.7 11/8 0.9 0.7 11/9 -0.8 -0.3 11/10 -0.6 -0.4 11/11 1.9 1 11/14 -0.7 2 11/15 0.1 0.1 11/16 0.9 1.3 11/17 0.8 0.9 11/18 -0.8 0 11/19 0.9 0.2
Explanation / Answer
Date Daily Abnormal Return (%) Cumulative Abnormal Return (%) -5 -0.4 -0.4 -4 -0.2 -0.6 -3 0.5 -0.1 -2 0.2 0.1 -1 -0.9 -0.8 0 2.7 1.9 1 0.0 1.9 2 0.4 2.3 3 0.1 2.4 4 0.8 3.2 5 -0.1 3.1
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