FIN 4092 Online Assignment _3

# FIN 4092 Online Assignment _3 - FIN 4092 On-Line...

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FIN 4092 On-Line Assignment #3 Due Oct 19, 2010 Complete the following problems from Chapter s 7& 8: 1. During the day, a firm announced that its CEO was retiring. The firm’s return that day was –0.25% and the market’s return was –0.41%. The daily CAPM model coefficients for the firms are α =0.03 and β =0.75. Using the market model and the market-adjusted model, determine the abnormal return for the firm. 2. If a company announced the resignation of its CEO and the stock price of that company increased by 1.2%. The DJIA rose by 1.3% in that day. The average return for the company is 0.50% over the last six month. The beta is 0.8 and alpha is -0.2. What is the abnormal return of this company based on the mean-adjusted

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Unformatted text preview: model? 3. A. Suppose an investor owns 350 shares of a company that announced a 2 for 1 split, what is the number of shares after the stock split? B. Suppose an investor owns 1,000 shares of a company that announced a 1 for 4 split, what is the number of shares after the stock split? 4.Consider an investor bought 100 shares of Boeing Company for \$87 per share which peaked at \$105 and later sold for \$91, what is the gain or loss if the reference point is the purchase price? 5.Consider an investor bought a stock for \$150 per share which later peaked at \$200. If the investor sold the stock as soon as it went up by only \$4, this is called?...
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• Spring '10
• Spencer
• Abnormal return, Boeing Company, CAPM model coefficients

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