ans-odd-problems-ch13

ans-odd-problems-ch13 - CHAPTER 13 CORPORATE FINANCING...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 13 CORPORATE FINANCING DECISIONS AND EFFICIENT CAPITAL MARKETS Answers to odd-numbered problems Basic 1. To find the cumulative abnormal returns, we chart the abnormal returns for each of the three airlines for the days preceding and following the announcement. . The abnormal return is calculated by subtracting the market return from a stock’s return on a particular day, R i – R M . Group the returns by the number of days before or after the announcement for each respective airline. Calculate the cumulative average abnormal return by adding each abnormal return to the previous day’s abnormal return. Abnormal returns ( R i – R M ) Days from announcement Delta United American Sum Average abnormal return Cumulative average residual –4 –0.2 –0.2 –0.2 –0.6 –0.2 –0.2 –3 0.2 –0.1 0.2 0.3 0.1 –0.1 –2 0.2 –0.2 0.0 0.0 0.0 –0.1 –1 0.2 0.2 –0.4 0.0 0.0 –0.1 0 3.3 0.2 1.9 5.4 1.8 1.7 1 0.2 0.1 0.0 0.3 0.1 1.8 2 –0.1 0.0 0.1 0.0 0.0 1.8 3 –0.2 0.1 –0.2
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/14/2011 for the course FINANCE 620 taught by Professor Halstead during the Fall '09 term at UMBC.

Page1 / 2

ans-odd-problems-ch13 - CHAPTER 13 CORPORATE FINANCING...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online