In an Efficient Market, Daily Abnormal Returns

question 23

Multiple Choice

In an efficient market, daily abnormal returns:

• A)are very volatile.
• B)reflect news within the past week.
• C)reflect news since the prior trading day.
• D)remain constant.
• E)do not exist.

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Definitions:

Compounded Annually

The calculation of interest on both the initial principal and the accumulated interest from past periods once a year.

Time-value of Money

The concept that money available at the present time is worth more than the same amount in the future due to its earning capacity.

Month-end Payments

Payments that are due or processed at the end of each month.

Compounded Semi-annually

A method of calculating interest in which the interest is added to the principal sum twice a year.