A major airline company, which we'll call Deltacorp, closed trading yesterday at $20 per share. This morning,
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Question:
A major airline company, which we'll call Deltacorp, closed trading yesterday at $20 per share. This morning, Deltacorp announced a significant decrease in flight capacity for the upcoming fiscal quarter. By market close today, Deltacorp's stock price was $15.00 per share.
Deltacorp's beta is 1.7, the risk-free rate is 0.5%, and the market return is 2.5% today. Assuming no other announcements were made by Deltacorp today, and the CAPM holds, what was the dollar change in Deltacorp's stock price attributable to this morning's announcement about reduced flight capacity?
Report as a dollar amount.
Related Book For
Managerial Accounting
ISBN: 978-1259024900
9th canadian edition
Authors: Ray Garrison, Theresa Libby, Alan Webb
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