Question

TYR just announced yesterday that its fourth-quarter earnings will be 35% lower than last year's fourth quarter. You observe that TYR had an abnormal return of 3.7% yesterday. This suggests that

Answer 1

Answer: Investors expected the earnings increase to be smaller than what was actually announced.

Explanation:

Abnormal return on an asset such as stock refers to the difference between actual returns and expected returns. As such, if it is positive, that would mean that the actual returns are/ will be higher than the expected/anticipated returns.

TYR had an abnormal return of 3.7% which would mean that the the 35% lower fourth-quarter earnings was higher than investors expected from TYR.