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 Ford’s stock price produces the following estimates, which are believed to be stable over time:
rF =.10% +1.1rM
If the market index subsequently rises by 8% and Ford’s stock price rises by 7%, what is the abnormal change in Ford’s stock price?

Step by Step Solution

★★★★★

3.51 Rating (174 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Answer Abnormal Change in Fords Stock Price 190 Exp... View full answer

Question Has Been Solved by an Expert!

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

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

225-B-A-I (2649).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

An index model regression applied to past monthly excess returns in ABC Corporations stock price produces the following estimates, which are believed to be stable over time: RABC = .10% + 1.1RM If...

The data file Stock Market Index shows annual returns on a stock market index over 14 years. Test for randomness using the runs test.

The efficient market hypothesis implies that abnormal returns are expected to be zero. Yet in order for markets to be efficient, arbitrageurs must be able to force prices back into equilibrium. If...

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...

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...

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...

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...

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...

View previous attempt 1 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% + 1.1rm...

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...

Marriott Corporation split into two companies: Host Marriott Corporation and Marriott International. Host Marriott retained ownership of the corporation's vast hotel and other properties, while...

A butterfly excretes wastes through ________. A. Spinnerets. B. Malpighian tubules. C. Spiracles. D. Tracheal tubes.

Which one describes One Piece Flow?Sum - up all of the required cycle times for the first hiring request ( first unit ) to flow through the whole processIdentify the biggest cycle time in the overall...

On January 1, 2020, Spikes Corporation sold $100,000 of 4% bonds to Harris Company. The bonds mature on December 31, 2024 (5 years). For bonds of similar risk and maturity, the market yield was 6%....

You borrow a GPM of $120,000 with annual payments and 30-year term. The interest rate is 10% and the payment factors from year 1 to year 30 are: 10%, 20%, 30%, 40%, 50%, 60%, 70%, 80%, 90%, 100%,...

Company XYZ has 6 standard products from stainless steel and brass. The company's most popular product is Product XX The following are Product XX's data for next year budget: Activity Cost Driver...

Consider the table of ordered pairs. Provide a representation of the given information as a set of ordered pairs, a graph, a mapping, and as an equation. Use the equation to find f(50). 1. x 1 2 3 4...

CH 14F - Please respond to the following question(s) with a thoughtful response. Be sure to support your answer with reason and logic based upon this week's readings, but keep in mind that top scores...

1. A. Blanton Godfrey notes that many organizations are wired for failure; that is, their processes are not designed effectively or aligned with each other.58 He cites several examples. One is...

The investment policy statement of an institution must be concerned with all of the following except: a. Its obligations to its clients. b. The level of the market. c. Legal regulations. d. Taxation.

A clearly written investment policy statement is critical for a. Mutual funds b. Individuals c. Pension funds d. All investors

a. Think about the financial circumstances of your closest relative in your parents generation (for example, your parents household if you are fortunate enough to have them around). Write down the...

5 . Which statements describe the characteristics of the OSPF ( Open Shortest Path First ) protocol? OSPF _ _ _ _ _ _ _ _ . ( More than one statement applies ) .

You are considering buying some stock in GrowInc Company. You estimate that next year's dividend has the following probability distribution: You anticipate that next year's dividend will grow at a...

Your company took out an amortizing loan with the following terms: What is the annual payment on the loan (as a positive number)? Use Excel's PMT0 function. Attempt 1/10 for 10 pts. Create an...