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:

Excludable

A characteristic of a good or service that allows its owner to prevent others from using it without paying for it.

Free Rider

A person who receives the benefit of a good but avoids paying for it

Free-Rider

An individual who benefits from resources, goods, or services without paying for the cost of the benefit.

Market Forces

The economic factors affecting the price, demand, and availability of goods and services in a free market, primarily driven by supply and demand.