Why B is the correct answer ?

10. You analyze whether mergers and acquisitions create value for the shareholders of acquiring companies on a given market. For that purpose you have obtained estimates of abnormal returns for five acquirer stocks on the day of acquisition announcement CT MOT RBC BMO BBD 0.0154 -0.0068 -0.0406 -0.0171 -0.0285 You also know that the abnormal returns have been calculated using the market model The standard errors of corresponding market model regressions for the stocks are: C RBC BMO BBD 0.0151 0.0129 0.0155 0.0236 0.0173 _and conclude that the effect is You obtain the test statistic equal to A1 A2 at the 5% significance level and the mergers are A3 _for the shareholders of the acquiring firms. A.) A1: -0.90; A2: insignificant; A3: wealth neutral. B.) A1: -2.01; A2: significant; A3: wealth destroying. C.) Al: 1.56; A2: insignificant; A3: wealth neutral. D.) A1: 2.01; A2: significant; A3: wealth creating. E.) Al: -1.56; A2: insignificant; A3: wealth destroying. 10. You analyze whether mergers and acquisitions create value for the shareholders of acquiring companies on a given market. For that purpose you have obtained estimates of abnormal returns for five acquirer stocks on the day of acquisition announcement CT MOT RBC BMO BBD 0.0154 -0.0068 -0.0406 -0.0171 -0.0285 You also know that the abnormal returns have been calculated using the market model The standard errors of corresponding market model regressions for the stocks are: C RBC BMO BBD 0.0151 0.0129 0.0155 0.0236 0.0173 _and conclude that the effect is You obtain the test statistic equal to A1 A2 at the 5% significance level and the mergers are A3 _for the shareholders of the acquiring firms. A.) A1: -0.90; A2: insignificant; A3: wealth neutral. B.) A1: -2.01; A2: significant; A3: wealth destroying. C.) Al: 1.56; A2: insignificant; A3: wealth neutral. D.) A1: 2.01; A2: significant; A3: wealth creating. E.) Al: -1.56; A2: insignificant; A3: wealth destroying