The Abnormal Return in an Event Study Is Described as The

question 46

Multiple Choice

The abnormal return in an event study is described as the:

• A)actual return on a security minus the market rate of return on the same date.
• B)total return earned by a security on the date of an announcement affecting that security.
• C)total return earned on a security for the 7-day period commencing three days prior to an announcement affecting that security.
• D)change in market value of a security on the day of an announcement affecting that security.
• E)any change in the market price of a security that exceeds five percent over a 7-day period.

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Definitions:

Gross Investment

The total amount invested in the purchase of new capital assets plus replacement of depreciated assets, reflecting the total expenditure on new capital in an economy.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time due to wear and tear or obsolescence.

Net Investment

The overall sum invested by a company or an economy in capital assets, with depreciation deducted.

Depreciation

Depreciation is an accounting method of allocating the cost of a tangible or physical asset over its useful life, representing how much of the asset's value has been used up.