Cumulative Abnormal Returns (CAR)

question 20

Multiple Choice

Cumulative abnormal returns (CAR)

• A) are used in event studies.
• B) are better measures of security returns due to firm-specific events than are abnormal returns (AR).
• C) are cumulated over the period prior to the firm-specific event.
• D) are used in event studies and are better measures of security returns due to firm-specific events than are abnormal returns (AR).
• E) are used in event studies and are cumulated over the period prior to the firm-specific event.

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Definitions:

Common Law

A body of legal principles that derives from court decisions over time rather than from statutes or constitutions, emphasizing precedent in judicial decisions.

Creditor

An individual or institution that lends money or extends credit to another party, known as the debtor.

Shareholder Rights

The entitlements and protections granted to individuals or entities that own shares in a corporation, including voting on corporate matters.

Subchapter S Corporation

A type of corporation created through an IRS tax election to pass corporate income, losses, deductions, and credits through to shareholders for federal tax purposes.