ALLGO Announced at Time T That It Was Acquiring DoLittle

question 22

Multiple Choice

ALLGO announced at Time t that it was acquiring DoLittle Industries.There were no other announcements affecting these firms.ALLGO's stock had daily returns of -.2,+.1,-.5,-.1,+.1 for Time _{t - 2} to Time _{t + 2},respectively.The daily returns on the market were -.1,+.2,+.1,-.2,and +.2 for Time _{t - 2} to Time _{t + 2},respectively.What is the cumulative abnormal return for these five days?

• A)-.7
• B)-.8
• C)-.5
• D)-.10
• E)-.3

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Definitions:

Supply-Side Economists

Economists who believe that reducing taxes and decreasing regulation will lead to an increase in production and economic growth.

Laffer Curve

A theoretical representation showing the relationship between tax rates and the amount of tax revenue collected by governments.

Tax Cuts

Reductions in the amount of taxes imposed by the government, often to stimulate economic growth or increase disposable income.

Monetary Policy

The process by which a central bank or monetary authority manages the money supply to achieve specific goals such as controlling inflation, maintaining employment, and stabilizing the currency.