After the first outbreak of COVID-19, TSX (Toronto Stock Exchange) index lost over 37% of its value

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After the first outbreak of COVID-19, TSX (Toronto Stock Exchange) index lost over 37% of its value in March 2020, but now it has surpassed its value before that fall. Assume that before the COVID shock, the value of each company in the TSX depended on its expected future earnings and its risk-adjusted discount rate. What possible reasons explain the movement of the TSX during and after the COVID shock? Explain carefully. You may want to distinguish between economic-specific (systematic) and industry or firm-specific (unsystematic) effects. A numerical example may be useful.

How might the outbreak of COVID-19 impact firm beta? Would the impact depend on type of firm? Explain carefully.

Posted Date: May 13, 2024 02:18 AM

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After the first outbreak of COVID-19, TSX (Toronto Stock Exchange) index lost over 37% of its value

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Expert Answer:

The movement of the TSX Toronto Stock Exchange during and after the COVID19 shock can be attributed to various factors both economicspecific systematic and industry or firmspecific unsystematic Here a... View the full answer

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