In Which of the Following Situations Is an Event Study

question 24

Multiple Choice

In which of the following situations is an event study most likely to be useful?

• A)a study designed to determine the effect that recessionary fears have had on charitable contributions during a period when the CEO of one of the largest charities has been
• Indicted for fraud
• B)a study designed to determine what effect the completion of a merger agreement that was announced at least 18 months prior would have on the price of the acquiring firm today
• C)a study designed to determine what effect the announcement of a new patent has on the stock price of a firm
• D)a study designed to determine what effect the arrest of a famous actress or actor will have on the aggregate value of the stock market

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Definitions:

Floating Exchange Rates

A system in which the value of a currency is determined by the forex market based on supply and demand relative to other currencies, unlike fixed exchange rates that are tied to a physical commodity or another currency.

Gold Convertible

A financial system where a country's currency has a fixed value in terms of gold, allowing it to be exchanged for a specified amount of gold.

Balance-of-Payment Deficits

A situation in the balance of payments where the payments made by a country for its imports, investments abroad, and other outflows are greater than the inflows from exports, foreign investments, etc.

Japanese Yen

The official currency of Japan, known globally as a major currency for trade and finance.