ABPharmaceutical Announced FDA Approval for a New Drug on October

question 37

Multiple Choice

A.B.Pharmaceutical announced FDA approval for a new drug on October 12.Uptown Drug Co.announced FDA approval for its new drug on October 14.No other information was released that would affect returns over this time period.What is the combined cumulative abnormal return for the 5 day period commencing 2 days prior to the FDA approval announcement date? Use the following data to answer this question.No trading occurred on October 15 or 16.

• A)0.6 percent
• B)1.0 percent
• C)1.2 percent
• D)1.3 percent
• E)1.6 percent

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Definitions:

Dispersed

Spread out or scattered, not concentrated in one area.

Data Distribution

The way in which data points are spread or dispersed across values in a dataset.

Skewness

A measure of the asymmetry of the probability distribution of a real-valued random variable; indicates how the tail on one side of the distribution compares to the tail on the other side.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, indicating how much the values deviate from the mean.