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:

Price Elastic

An assessment of the influence that price changes have on the consumer's purchasing volume of a good.

Inversely Related

A relationship between two variables where one increases as the other decreases.

Total Revenue

The total income generated by a business from the sale of goods and services before any costs or expenses are deducted.

Price Decrease

refers to a reduction in the cost of a good or service, which can lead to an increase in demand due to the law of demand, assuming other factors remain constant.