How Should Cumulative Abnormal Returns React in an Efficient Market

question 41

Multiple Choice

How should cumulative abnormal returns react in an efficient market?

• A) relatively constant, sharp break, relatively constant
• B) relatively constant with no breaks
• C) steadily increasing
• D) steadily decreasing
• E) remain constant at zero

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Definitions:

Not Related

A term indicating that two or more items or concepts have no association or link between them.

Degrees of Freedom

The number of independent pieces of information upon which a statistical estimate is based, minus the number of parameters estimated.

Test Statistic

A value calculated from sample data that is used in a hypothesis test to determine whether to reject the null hypothesis.

Slope

The rate of change of the dependent variable with respect to an independent variable in a linear relationship.