Question: When measuring the event return in a Leveraged Recapitalization or a Leveraged Buyout, the event return is often over-estimated because changes in the beta

When measuring the event return in a Leveraged Recapitalization or a Leveraged

When measuring the event return in a Leveraged Recapitalization or a Leveraged Buyout, the event return is often over-estimated because changes in the beta of the stock are ignored. Explain exactly how this happens, using the formula for CAR (cumulative abnormal return).

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ANSWER The term abnormal return is used to describe an unexpected profit or loss on an investment ov... View full answer

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