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A Car Maker Announced a Recall for Faulty Brakes

question 45

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A car maker announced a recall for faulty brakes. The company stock returned. 004 the day before the announcement; -.001 the day of the announcement and .0045 the day after the announcement. The market average was .006, .0072 and .004 for the three days respectively. The daily beta for the car maker is .9. What are the three abnormal returns for the car maker's stock?


Definitions:

Preoperational Thought

Refers to a stage in Jean Piaget's theory of cognitive development where children from 2 to 7 years old are able to engage in symbolic play but have not yet understood the concept of logical operations.

Language Learning

The process by which individuals acquire the ability to perceive, comprehend, and produce verbal and non-verbal forms of communication.

Phonology

The sound system of a language; includes rules for arranging the basic sounds or “phonemes” of the language.

Semantics

An aspect of a language that children must learn, including the words and word parts that express meanings in that language, also called the meaning system of a language.

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