Cumulative Abnormal Returns (CAR)

question 13

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) a and b.
• E) a and c.

---

Definitions:

Defensive Mergers

Mergers undertaken by companies to protect against potential threats, improve market position, or mitigate weaknesses.

Shareholders' Wealth

Refers to the overall value of the shares an investor holds in a company, which increases as the company's value goes up.

Government Policies

Strategies and measures adopted by a government to regulate, guide, and control activities within its jurisdiction, affecting economic, social, and administrative spheres.

Managers' Actions

Decisions and activities undertaken by the management of a company to achieve its objectives.