Question: An index model regression applied to past monthly returns in Fords stock price produces the following estimates, which are believed to be stable over time:

An index model regression applied to past monthly returns in Fords stock price produces the following estimates, which are believed to be stable over time:

r_F = 0.1% + 1.1r_M

If the market index subsequently rises by 9.0% and Fords stock price rises by 9%, what is the abnormal change in Fords stock price? (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.)

Abnormal return

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

An index model regression applied to past monthly returns in Ford's stock price produces the following estimates, which are believed to be stable over time: rf = 0.1% + 1.10m If the market index...

In a recent closely contested lawsuit, Apex sued Bpex for patent infringement. The jury came back today with its decision. The rate of return on Apex was rA = 3.3%. The rate of return on Bpex was...

An index model regression applied to past monthly returns in Ford's stock price produces the following estimates, which are believed to be stable over time: rf = 0.10% + 1.1rm If the market index...

1) Consider the following table, which gives a security analyst's expected return on two stocks in two particular scenarios for the rate of return on the market: Market Return Aggressive Stock...

Having some trouble with a few of these questions if anyone doesn't mind answering them no need to show work 1. An index model regression applied to past monthly returns in Ford's stock price...

An index model regression applied to past monthly returns in Ford's stock price produces the following estimates, which are believed to be stable over time: re = 0.1% + 1.1rM If the market index...

An index model regression applied to past monthly returns in Fords stock price produces the following estimates, which are believed to be stable over time: rF = 0.1% + 1.1rM If the market index...

An index model regression applied to past monthly returns in Fords stock price produces the following estimates, which are believed to be stable over time: r F = 0.1% + 1.1 r M If the market index...

An index model regression applied to past monthly returns in Ford's stock price produces the following estimates, which are believed to be stable over time: rf = 0.1% + 1.lrm If the market index...

Does the fineness issue arise relative to the handling of capitalized interest costs (SFAS No. 34) relative to the treatment of this item in SFAS No. 95? Explain.

What are the two approaches for estimating the controllable cost of capacity resources over the long term?

Joe has a tax basis of $ 1 4 , 0 0 0 in his partnership interest at the beginning of the partnership tax year. The following amounts of partnership debt were allocated to joe and are included in his...

Draw a class diagram and its relationship based on the following statements. You can use any UML tool/software to represent your class diagram. Do NOT copy and paste your diagram, use the attachment...