Around the Announcement Date of a Merger or Acquisition,abnormal Returns

question 36

Multiple Choice

Around the announcement date of a merger or acquisition,abnormal returns to target firm shareholders normally average

• A) 10%
• B) 30%
• C) -3%
• D) 100%
• E) 50%

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Definitions:

Expected Return

The expected return is the anticipated profit or loss from an investment over a given period.

True Risk

The actual level of risk associated with an investment or decision, considering all factors including unknowable future events.

Systematic Risk Principle

Principle stating that the expected return on a risky asset depends only on that asset’s systematic risk.

Expected Return

The weighted average of all possible returns for an investment, with each return being weighted by its probability of occurrence.