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astra-53 [7]
2 years ago
7

If the market index subsequently rises by 8% and Ford’s stock price rises by 7%, what is the abnormal change in Ford’s stock pri

ce? (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 1 decimal place.)
Business
1 answer:
Margarita [4]2 years ago
3 0

Answer:

-1.9%.

Explanation:

The computation of the abnormal change in the stock price of ford should be given below:

Given that

The return on the market is 8%.

So, the forecast monthly return for Ford is

= 0.10% + (1.1 × 8%)

= 8.9%.

And, the Ford’s actual return was 7%,

So,

the abnormal return be

= 7% - 8.9%

= -1.9%.

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