Event study, Financial Management

Assignment Help:

Event studies are one of the most powerful and widely used applications of the capital asset pricing model (CAPM). An event study is an attempt to determine whether a particular event in the capital market or in the life of a company has affected a company's stock market performance. The event-study methodology aims to separate company-specific events from market- and industry- specific events, and has often been used as evidence for or against market efficiency.

1. An event study aims to determine whether an event or announcement caused an abnormal movement in a company's stock price. The abnormal returns (AR) are calculated as the difference between a stock's actual return and its expected return, where the stock's expected return is typi- cally measured using the market model, which relies only on a stock's market index to estimate its expected return.

2 Using the market model can measure the correlation between an individual stock's return and its corresponding market returns. In some cases, we sum the abnormal returns to arrive at the cumulative abnormal return (CAR), which measures the total impact of an event through a particular time period, also called the event window.

 


Related Discussions:- Event study

Corporate governance features, Corporate Governance features Corporat...

Corporate Governance features Corporate compliance: The BOD should make sure that corporation obeys with all related laws, governance practices, regulations, accounting an

Discuss the techniques to manage risks, Q. Discuss the techniques to manage...

Q. Discuss the techniques to manage risks? Once risks have been identified and assessed, all techniques to manage the risk fall into one or more of the four major categories li

Illustrate the steps of creative accounting, Illustrate the steps of Creati...

Illustrate the steps of Creative accounting Creative accounting include: 1 Timing of transactions. Delaying or hurrying up the despatch of invoices at the yearend to decr

Types of investment strategy of hedge funds, Various Types of Strategies ...

Various Types of Strategies Different types of hedge fund strategies are discussed as follows: Relative Value of Strategies: Relative value strategies are also known as no

Define where security returns are found less correlated, Security returns a...

Security returns are found to be less correlated across countries than within a country. Why can this be? Answer:  Security returns are less correlated possibly because countries

Portfolio Management, Portfolio Project The purpose of this project is to h...

Portfolio Project The purpose of this project is to help you to gain an understanding of how the stock market works and of the relationship between theory and practice. You are gi

Pay back period (pbp) , Pay Back Period (PBP) : This is the most popula...

Pay Back Period (PBP) : This is the most popular method employed by industrial practitioners for ranking investment projects. This is described as the "period required for a pr

Business organization, what business organization do you preffer ? service ...

what business organization do you preffer ? service concern,trading concern or manufacturing concern

Role of sponsor, Role of Sponsor In the establishment of mutual fund tr...

Role of Sponsor In the establishment of mutual fund trust, the main role is played by the sponsors. Both the trustees and the fund managers or the asset management company have

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd