Cumulative Abnormal Returns (CAR)

question 20

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) are used in event studies and are better measures of security returns due to firm-specific events than are abnormal returns (AR).
• E) are used in event studies and are cumulated over the period prior to the firm-specific event.

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Definitions:

U.S.GAAP

United States Generally Accepted Accounting Principles; a set of accounting standards used in the U.S. for financial reporting.

Comprehensive Income

The total change in equity for a reporting period other than from transactions with owners, including all unrealized gains and losses.

Warranty Expenses

Costs incurred by a company to repair or replace products under warranty, recognized as a liability when products are sold.

Inventory Purchases

The total cost incurred to buy goods intended for sale during a specific accounting period before any deductions or sales.