The Abnormal Return Due to an Event Is Estimated as the Difference

question 24

Multiple Choice

The abnormal return due to an event is estimated as the difference between

• A)the stock's actual return and stock's expected return.
• B)the stock's actual return and the risk-free rate.
• C)the stock's expected return and a benchmark.
• D)the stock's actual return and a benchmark.

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Definitions:

Collateral Position

Collateral is property or assets that a borrower offers to a lender as security for a loan, which can be taken by the lender if the borrower fails to repay.

Stretching Payables

Paying invoices after they’re due according to the terms of sale. Also called leaning on the trade.

Short-term Loans

Loans that are scheduled for repayment within a short timeframe, usually less than one year.

Accounts Receivable

Accounts receivable refers to the money owed to a company by its customers for goods or services delivered but not yet paid for, representing a line of credit from the company to the customer.